Implementing mandatory audit firm rotation: effects on audit and non-audit fees

Ilias Basioudis, Beatriz Cuellar-Fernández, Javier Garcia Lacalle*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review


The 2014 reform of the European Union (EU) regulation on auditing includes mandatory audit firm rotation and a significant limitation of the provision of non-audit services by the audit firm to their existing clients.This paper analyses the changes in audit fees, and non-audit fees, as well as in their proportion, when thereis a switch of audit firms, before and after the new regulation. The analysis is carried out for the Spanish listed companies from 2011 to 2018 using two types of analyses, descriptive/comparative and multivariate,panel data, regressions. As expected, the new EU regulation has resulted in a significant increase in audit firm switches. The results show that, when there is a change of audit firm, the incoming firm offers a significant discount to the new client with the outgoing firm. This is the case before and after the reform, and for both voluntary and mandatory switches after the reform. In addition, the reform has led to a reduction of non-audit fees, which is especially evident after a voluntary audit firm switch. We conclude that audit firms seem to be willing to take on the additional cost of auditing a new company to gain clients.
Original languageEnglish
Pages (from-to)174-192
Number of pages19
JournalRevista de contabilidad
Issue number1
Early online date1 Jan 2024
Publication statusPublished - 1 Jan 2024

Bibliographical note

Copyright © 2024 ASEPUC. Published by EDITUM - Universidad de Murcia. This is an open access article under the CC BY-NC-ND license (


  • Audit regulation
  • Audit firm rotation
  • Lowballing practices
  • Audit fees
  • Non-audit fees


Dive into the research topics of 'Implementing mandatory audit firm rotation: effects on audit and non-audit fees'. Together they form a unique fingerprint.

Cite this