Optimistic Tone and Audit Fees: Some Australian Evidence

  title={Optimistic Tone and Audit Fees: Some Australian Evidence},
  author={Vicente Bicudo de Castro and Ferdinand A. Gul and Mohammad Badrul Muttakin and Dessalegn Getie Mihret},
  journal={Corporate Finance: Governance},
We examine whether the tone of corporate annual reports is associated with audit pricing decisions. A unique dataset drawn from annual reports of nonfinancial firms listed on the Australian Stock Exchange for the period from 2002 to 2014 is generated using textual analysis. We find that annual reports that convey optimistic tone are associated with lower audit fees, suggesting that annual report tone reflects factors that auditors consider in assessing audit risk. Consistent with the inverse… 
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