Money laundering and audit fees
We investigate the association between state-level money laundering sentences and audit fees in the US. Money laundering measures a broad category of offenses involving financial transactions using funds or monetary instruments gained through criminal activities and tax evasion. We find that firms h...
| Main Authors: | , , |
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| Format: | Journal Article |
| Published: |
Routledge
2017
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| Online Access: | http://hdl.handle.net/20.500.11937/59238 |
| _version_ | 1848760423543734272 |
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| author | Habib, A. Hasan, Mostafa Al-Hadi, Al-Hadi Ahmed |
| author_facet | Habib, A. Hasan, Mostafa Al-Hadi, Al-Hadi Ahmed |
| author_sort | Habib, A. |
| building | Curtin Institutional Repository |
| collection | Online Access |
| description | We investigate the association between state-level money laundering sentences and audit fees in the US. Money laundering measures a broad category of offenses involving financial transactions using funds or monetary instruments gained through criminal activities and tax evasion. We find that firms headquartered in US states with high rates of money laundering sentences pay more audit fees. Our results suggest that auditors incorporate, as a fee premium, the higher risks involved when clients operate in those states. Our result remains robust to alternative specifications of money laundering proxies, and to the inclusion of a number of firm-level and state-level control variables. We also conduct two-stage least squares and propensity score matching analysis to mitigate the endogeneity problem that might arise from omitted variables, reverse causality, or model misspecification problems. |
| first_indexed | 2025-11-14T10:15:33Z |
| format | Journal Article |
| id | curtin-20.500.11937-59238 |
| institution | Curtin University Malaysia |
| institution_category | Local University |
| last_indexed | 2025-11-14T10:15:33Z |
| publishDate | 2017 |
| publisher | Routledge |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | curtin-20.500.11937-592382018-04-19T05:53:32Z Money laundering and audit fees Habib, A. Hasan, Mostafa Al-Hadi, Al-Hadi Ahmed We investigate the association between state-level money laundering sentences and audit fees in the US. Money laundering measures a broad category of offenses involving financial transactions using funds or monetary instruments gained through criminal activities and tax evasion. We find that firms headquartered in US states with high rates of money laundering sentences pay more audit fees. Our results suggest that auditors incorporate, as a fee premium, the higher risks involved when clients operate in those states. Our result remains robust to alternative specifications of money laundering proxies, and to the inclusion of a number of firm-level and state-level control variables. We also conduct two-stage least squares and propensity score matching analysis to mitigate the endogeneity problem that might arise from omitted variables, reverse causality, or model misspecification problems. 2017 Journal Article http://hdl.handle.net/20.500.11937/59238 10.1080/00014788.2017.1392842 Routledge restricted |
| spellingShingle | Habib, A. Hasan, Mostafa Al-Hadi, Al-Hadi Ahmed Money laundering and audit fees |
| title | Money laundering and audit fees |
| title_full | Money laundering and audit fees |
| title_fullStr | Money laundering and audit fees |
| title_full_unstemmed | Money laundering and audit fees |
| title_short | Money laundering and audit fees |
| title_sort | money laundering and audit fees |
| url | http://hdl.handle.net/20.500.11937/59238 |