The Relationship between IFRS Adoption and Audit Fees: Evidence from China

We investigate the effect of International Financial Reporting Standards (IFRS) mandatory adoption on audit fees, and how auditor type (Big 4 vs. non-Big 4) could moderate this relationship. Standard setters argue that IFRS adoption has a lot of benefits since it would lead to improving the accounting information quality. However, IFRS adoption has incremental costs also. our findings suggest that auditors charge higher audit fees after IFRS adoption. However, findings reveal that this relationship is more pronounced for non-big 4 audit firms. This study’s findings are important to standard setters as they evaluate the benefits and cost of IFRS adoption.