Determinants of Audit Fees: Evidence from the Companies Listed in Bahrain

Abstract

Many studies have been conducted on the market for audit services in Anglo‐Saxon countries, but, to‐date, none of them have focused on the Middle Eastern countries. This paper examines the audit fee structure in Bahrain for 38 companies listed on the Bahrain Stock Exchange (BSE). By analyzing the data concerning a number of variables representing size, risk, complexity, timing of audit, and profitability, a model is developed of the determinants of audit fees. The study strongly confirms that most of the previous research findings are also applicable to the Bahrain market, and that audit fees are significantly associated with the size, risk, profitability and complexity of the client operations. The study also suggests that other important issues be considered, such as non‐audit services, the extent of market concentration, and audit services in the unregulated market.

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