External Factors and the Pricing of Audit Services: A Systematic Review of the Archival Literature using a PESTLE Analysis

Abstract

Client- and auditor-related attributes are well-documented determinants of audit pricing but the number of empirical archival studies investigating the effects of external factors on audit pricing has grown rapidly in recent years. We extend the traditional framework used to classify audit fee research by adding a novel structure that focuses on political, economic, social, technological, legal, and environmental/ecological factors (a PESTLE analysis). We provide a systematic review of the literature on external factors and audit pricing, and we suggest opportunities for future research. Our review reveals that audit researchers focus on legal factors in terms of regulatory changes, and we find increased attention to political, economic, and social factors. However, despite increased public scrutiny, technological and environmental/ecological factors remain under-researched. Overall, our review demonstrates the importance of considering external factors to gain a more complete understanding of the audit pricing framework, especially in terms of global and regional variations.