#12428. The impact of fair value estimates on audit fees: evidence from the financial sector in Jordan

July 2026publication date
Proposal available till 11-05-2025
4 total number of authors per manuscript0 $

The title of the journal is available only for the authors who have already paid for
Journal’s subject area:
Sociology and Political Science;
Development;
Accounting;
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Abstract:
This study investigates the association between the estimates of fair value and external auditors fees based on a sample of 32 Jordanian financial companies listed on the Amman Stock Exchange (ASE). We employ random effect models to test our hypothesis. We found a positive relationship between audit fees and the proportion of fair value assets, which implies that external auditors are more likely to spend more effort for complex estimates, thereby increasing audit fees. We examined the relationship between audit fees and three levels of fair value inputs and found a positive relationship between the level of effort spent on assessment of higher uncertainty fair value inputs and audit fees. The findings are consistent with the expectation that more audit effort is required in a highly regulated environment due to the possibility of a higher cost of litigation. This study provides new empirical evidence that the complexity and risk of fair value estimates significantly influences auditors motivation to expend additional effort, resulting in higher audit cost.
Keywords:
Amman stock exchange; Audit fees; Fair value; Financial reports; Jordan

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