Local Gambling Norms and Audit Pricing

This study investigates whether local gambling norms are associated with audit pricing. Using a religion-based measure of social gambling preferences, we find robust evidence that public firms located in U.S. counties with more liberal gambling norms exhibit higher levels of audit fees. This result is consistent with our view that, as an important external risk factor, clients' local gambling norms influence audit pricing decisions. Our findings are robust to a battery of sensitivity tests including a natural experiment