University of Tehran Press Interdisciplinary Journal of Management Studies 2981-0795 19 3 2026 05 31 Regulation and Audit Fees for Initial Audit Engagements 497 525 104274 10.22059/ijms.2025.380306.676927 EN Fakhroddin Mohammad Rezaei Faculty of Finance, Kharazmi University, Tehran, Iran Ehsan Dolatzarei Department of Accounting, Faculty of Management, University of Tehran, Tehran, Iran Omid Faraji Department of Accounting, Faculty of Management and Accounting, University of Tehran, College of Frabi, Qom, Iran Zabihollah Rezaee Crews School of Accountancy, the University of Memphis, TN, USA Journal Article 2024 08 02 This study examines whether the audit firm ranking (AFR) mandated by the Securities and Exchange Organization (SEO) in Iran in 2013 is associated with audit fees for initial audit engagements. We propose that such regulation, in a highly competitive and compliance-driven market, could differently impact the bargaining power of auditors. Our findings indicate that audit fee discounts in initial engagements have decreased in the post-AFR era. Additionally, in line with the bargaining power perspective, audit fee discounts are greater when switching to non-Top auditors compared to Top auditors (first-ranked Trusted Audit Firms by SEO), when switching within non-Top auditors as opposed to Top auditors, and when switching from Top to non-Top auditors rather than from non-Top to Top auditors. The results are robust across several sensitivity tests and offer policy, practice, and research implications by exploring audit fee discounts in initial engagements arising from regulatory initiatives. https://ijms.ut.ac.ir/article_104274_40f8bef3f3e5eae9d61ec7558e6463df.pdf