2025- Working Papers: Finance, Accounting and Insurance
The Value of Status: Exploring the Price of Relative Positioning, 40 pp.
D. Ben-Shahar, Y. Deng, T. Somerville, E. Sulganik and H. Zhu
(Working Paper No. 1/2025)
Research No: 02224100
In the standard economics model, individual utility is a function of one’s own consumption. Yet, the pursuit of status, which depends on the recognition of others and one’s standing relative to them, is an important driver of human behavior. Motivated by literature in linguistics and psychology that correlates between one’s vertical positioning and well-being, we explore the value of vertical status – one’s physical vertical positioning relative to others. Using transactions in high-rise residential buildings in Vancouver (Canada), we find an economically significant price premium for being higher than other units in both one’s own building and surrounding buildings, conditional on a unit’s absolute height, view, and other unit and building characteristics. Our findings further suggest that people weigh more heavily the disutility from having others positioned above them than the utility from having others below them. Finally, we find that the marginal value of vertical status increases with height.
Audit fees and corruption: An international analysis of audit rates and audit hours, 46pp.
N. Abraham, E. Amir and M. Ghittis
(Working Paper No. 7/2025)
Research No: 06226100
We expect that country risk affects a country’s audit risk. Hence, audit price in a country, represented by average hourly audit fee, should be positively associated with country-specific audit risk. We identify a small sample of companies listed on the Tel Aviv Stock Exchange (Israel) that use auditors in different countries. As these companies must disclose total audit fees and hours of engagement, we compiled a novel dataset that includes both fees and hours in 25 different countries for 10 years in order to compute the average hourly audit fee per country. We use the Corruption Perception Index (CPI), published annually by Transparency International, as the primary measure of country risk for each country. We expect and find a positive association between perceived corruption and average hourly audit fee normalized by a country’s per-capita Gross Domestic Product. We use several alternative measures of country risk with similar results. However, we find no association between audit hours and any country-specific risk measures, including corruption. Our results are consistent with the argument that auditors in more corrupt countries charge higher hourly audit rate for their services, but we do not find simultaneously an increase in audit effort in terms of total hours.
