The demand for auditor reputation across international markets for audit services $ Neil Fargher a, *, Mark H. Taylor b,1 , Daniel T. Simon c a School of Accountancy, University of New South Wales, Sydney, NSW 2052, Australia b School of Accounting, Darla Moore College of Business Administration, University of South Carolina, Columbia, SC 29208, USA c Department of Accountancy, 376 COBA, University of Notre Dame, Notre Dame, IN 46556, USA Abstract Previous research has documented a positive relation between variation in audit fees across countries and specific macroeconomic factors such as a country’s level of litigiousness and the level of required disclosure. Such studies have focused on the supply of auditor services using single-equation models. This study examines not only the supply of but also the demand for large-firm auditors across 20 different countries using the simultaneous-equations approach. This approach is used to account for the endogeneity between choice of auditor and audit fees. The results indicate an association between greater disclosure requirements and the choice of a large-firm auditor. They also indicate that increased litigation and regulation are associated with higher audit fees. D 2001 University of Illinois. All rights reserved. Keywords: Audit fees; Auditing; Litigation; Regulation 1. Introduction This paper examines the demand for auditor reputation across international markets for audit services. To address this issue, we examine a sample of audit fees across 20 countries that 0020-7063/01/$ – see front matter D 2001 University of Illinois. All rights reserved. PII:S0020-7063(01)00116-9 $ This paper was presented at the Illinois International Accounting Summer Conference held in Champaign, IL on June 1–2, 2001. * Corresponding author. Tel.: +61-2-9385-5809. E-mail addresses: n.fargher@unsw.edu.au (N. Fargher), mhtaylor@darla.badm.sc.edu (M.H. Taylor). 1 Tel.: + 1-803-777-4378. The International Journal of Accounting 36 (2001) 407 – 421