The Effect of Legal Entity Identifiers on Audit Fee Changes

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This study investigates whether a client’s use of a Legal Entity Identifier (LEI) is associated with audit fee changes. An LEI uniquely identifies different legal entities worldwide, making audit clients’ transactions and related parties more transparent and traceable, potentially reducing auditors’ costs and audit risks, as reflected in audit fee changes. Using a sample of U.S. firms, I find that audit fees increase more for LEI firms than for non-LEI firms within the first few years of LEI registration, but they increase less for LEI firms than for non-LEI firms afterward. The results support a reduction in audit costs due to LEIs, with a learning effect. I also find that audit firms’ brand name and industry expertise strengthen this association. This study provides initial empirical evidence of the effects of LEI and policy implications.

Original languageEnglish
Pages (from-to)177-197
Number of pages21
JournalJournal of Information Systems
Issue number3
StatePublished - 1 Sep 2022


  • Big N audit firms
  • Legal Entity Identifier
  • audit fees
  • audit firm industry expertise


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