CONCLUSION
At the most fundamental level, the non-uniform client distribution of fiscal year-ends throughout the calendar year leads to seasonal variation in the manifestation of audit demand and supply. From an auditor’s perspective, the calendar year may be divided into a busy season and an offseason. Consistent with our economic theoretical framework, the busy season leads to increased audit demand but constrained and inelastic supply, which in turn increases the price of audit services. By conducting a meta-analysis of existing empirical studies that use an audit fee model calibrated on data from U.S. public companies, we find that ceteris paribusthe audit busy season is associated with an approximately 10 percent increase in average audit fees. We consider this to be an economically significant audit fee premium. A meta-regression of the estimated busy season effect size and the contextual differences in research design between studies show that examining only Big N in the studies attenuates the busy season effect size but does not eliminate it, and that the busy season effect size might have increased post-SOX. Our results should be of interest to both audit clients and researchers who may be interested in the effect and fee premiums associated with seasonality.
