Chapter 10 Conclusion
10.4 Future Research
The limitations of this study open opportunities for future research.
First, the non-availability of data for the pre-SOX period in the US and hand collected data for certain variables in New Zealand restrict the scope of this study. Additional data can be procured from the auditee through interviews or questionnaires. However, this may be at the expense of having a smaller sample size and the results can be affected by non-response and other biases.
Second, future studies can widen the scope by incorporating other governance variables and wider incentive plans. These studies could further confirm or assess the influence of incentive schemes on audit fees.
Third, future studies can explore the determination of audit fees by internal control quality measures, and client importance measures. It is possible that both the clients and audit firms will gain experience from the SOX audit requirements, and eventually design cost saving methods that can reduce audit fees. These efficiencies would further add to audit fee reduction in the US market.
Fourth, in order to improve validity and reliability of the results, use of electronic data from trusted sources (like S&P or Compustat) rather than hand- collected data could be used to study audit fee determination in New Zealand. However, this will be possible only when the trusted sources provide such data for these variables along with other financial data.
176 Fifth, future studies can investigate a wider sample covering both pre-and post-SOX periods to more fully assess the effects of SOX. Then again, this will be restricted by the data constraints mentioned earlier.
Finally, future research could cover more countries to see the impact of diverse institutional settings (such as France, and Germany where audit regulations are different from those of the Anglo-American countries) on audit fees. Such studies could further explain how different audit regulatory requirements in different institutional settings impact audit fees.
177
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