This paper aims to investigate whether audit fees and financial report readability are bi-directionally related.,The authors test their hypotheses with empirical data. Specifically, they adopt a two-stage simultaneous equation regression model to assess the bi-directional relationship between audit fees and financial report readability.,While poor readability increases the fees charged by the auditor, higher audit fees improve the readability of the financial reports.,This study is based on US data. Future research may extend this study to other countries.,Poor financial report readability encumbers stakeholders of the firms. Understanding the interaction between financial report readability and audit fees will help both auditors and firm managers.,Audit committees aggressively negotiating for lower audit fees should be aware of the link of low audit fees, potentially indicative of poor quality, to less readable reports. Investors and regulators too should be concerned about this relationship, especially in instances when auditors low-ball audit fees or when firms aggressively negotiate for lower audit fees.,To the best of authors’ knowledge, this study is the first to document the bi-directional relationship between financial report readability and audit fees and assess the positive impact of audit fees on financial report readability.

中文翻译：

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财务报告的可读性和审计费用：联立方程法

本文旨在研究审计费用和财务报告的可读性是否是双向相关的。作者使用经验数据检验其假设。具体而言，他们采用两阶段联立方程回归模型来评估审计费用与财务报告可读性之间的双向关系。虽然可读性差会增加审计师收取的费用，但较高的审计费用会改善财务报告的可读性。 ，本研究基于美国数据。未来的研究可能会将这项研究扩展到其他国家。财务报告的可读性差会妨碍公司的利益相关者。了解财务报告的可读性和审计费用之间的相互作用将有助于审计师和公司经理。积极争取较低审计费用的审计委员会应意识到，较低的审计费用（可能表示质量较差）与可读性较低的报告之间的联系。投资者和监管机构也应关注这种关系，尤其是在审计师收取较低的审计费用或公司积极争取较低的审计费用的情况下。财务报告可读性与审计费用之间的方向关系，并评估审计费用对财务报告可读性的积极影响。