Journal ArticleDOI
City-level auditor industry specialization, economies of scale, and audit pricing
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In this paper, the authors examine the effects of city-level auditor industry specialization and scale economies on audit pricing in the United States, using a sample of Big N clients for the 2000-2007 period, and a scale measure based on percentile rankings of the number of audit clients at the city-industry level.Abstract:
We examine the effects of city-level auditor industry specialization and scale economies on audit pricing in the United States. Using a sample of Big N clients for the 2000–2007 period, and a scale measure based on percentile rankings of the number of audit clients at the city-industry level, we document significant specialization premiums and scale discounts in both the pre- and post-Sarbanes-Oxley Act (SOX) periods. However, the effects of industry specialization and scale economies on audit pricing are highly interactive. The negative effect of city-industry scale on audit fees obtains only for clients of specialist auditors. By contrast, clients of non-specialist auditors obtain scale discounts only when they enjoy strong bargaining power, suggesting that auditors are “forced” to pass on scale economies to clients with greater bargaining power. Data Availability: Data are available from sources identified in the article.read more
Citations
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Journal ArticleDOI
A Review of Archival Auditing Research
Mark L. DeFond,Jieying Zhang +1 more
TL;DR: In this article, the authors define higher audit quality as greater assurance of high financial reporting quality, and they provide a framework for systematically evaluating their unique strengths and weaknesses, including the role of auditor and client competency in driving audit quality.
Journal ArticleDOI
A review of archival auditing research
Mark L. DeFond,Jieying Zhang +1 more
TL;DR: In this article, the authors define higher audit quality as greater assurance of high financial reporting quality, and they provide a framework for systematically evaluating their unique strengths and weaknesses, including the role of auditor and client competency in driving audit quality.
Journal ArticleDOI
Audit Fees and Social Capital
Anand K. Jha,Yu Chen +1 more
TL;DR: In this paper, the authors examine the impact of social capital on audit fees and find that firms headquartered in U.S. counties with high social capital pay lower audit fees than those with low social capital.
Journal ArticleDOI
A Review of the Archival Literature on Audit Partners
Clive S. Lennox,Xi Wu +1 more
TL;DR: The authors reviewed the existing archival literature on audit partners, discusses some concerns with certain aspects of the literature, and provides some suggestions for future research, which is timely because audit partners' names in the United States have been publicly disclosed starting in 2017.
Journal ArticleDOI
Who's Really in Charge? Audit Committee versus CFO Power and Audit Fees
Matthew Beck,Elaine G. Mauldin +1 more
TL;DR: Although regulation makes audit committees responsible for determining and negotiating audit fees, researchers and practitioners express concerns that CFOs continue to control these negoti... as discussed by the authors, however, they do not have the authority to determine and negotiate audit fees.
References
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Estimating Standard Errors in Finance Panel Data Sets: Comparing Approaches
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Industrial market structure and economic performance
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Barriers to new competition
TL;DR: In this paper, a series of hypotheses as to the conditions of entry, and the probable degree to which they serve as barriers to new competition are presented, and a bold attempt is made to measure the height of these barriers in 20 manufacturing industries.