Journal of Accounting and Economics Vol. 27 No. 2 1999
The 150-hour rule
Abstract
This paper adapts Dye's (1995) model to evaluate the effects of the 150-hour rule on the audit market. Incorporating the auditors’ education as a joint input with the audit effort for determining the audit quality, we show that the audit fee is higher, pre-rule CPAs are better off, and audit clients are worse off as results of the Rule. Additionally, more pre-rule CPAs elect to enter the audit market. Some less wealthy post-rule CPAs who would otherwise get into the audit market choose not to. Surprisingly, the average audit quality in the market can be lower due to the Rule.
- DOI
- 10.1016/s0165-4101(99)00010-5
- Volume
- 27
- Issue
- 2
- Pages
- 203-228
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref