The Relationship between the Types of Assets Measured by Fair Value, the levels of Fair Value and Audit Fees of Listed Companies on the Stock Exchange of Thailand

Abstract

This study aims to examine the relationship between different types of assets measured at fair value and audit fees. Specifically, the research focuses on five categories of assets: property, plant, and equipment (PPE); investment property; intangible assets; biological assets; and financial assets. In addition, fair value measurement is classified into three levels based on the inputs used in the valuation process. This study investigates the association between the use of fair value measurements at each level and audit fees. The population includes all listed companies on the Stock Exchange of Thailand in the year 2022, excluding those in the financial industry and those undergoing restructuring resulting in final sample of 421 firms. This study uses descriptive statistic analysis, correlation coefficient analysis and multiple regression to analyze the data. The findings reveal that the proportion of PPE measured at fair value relative to total assets is significantly negatively associated with audit fees. This suggests that auditors may perceive lower risk or reduced audit effort when fair value is applied to PPE, compared to historical cost. Regarding the level of fair value measurement, both Level 1 and Level 3 fair values show a negative relationship with audit fees. However, the regression coefficient for Level 1 is more negative than that for Level 3, which may be attributed to the higher reliability and verifiability of Level 1 inputs compared to Level 3. These results provide insight into how fair value measurement influences auditors' risk assessments and pricing decisions.