Journal article
City-Level Auditor Industry Specialization, Economies of Scale, and Audit Pricing
The Accounting Review, Vol.87(4), pp.1281-1307
2012
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.
Details
- Title
- City-Level Auditor Industry Specialization, Economies of Scale, and Audit Pricing
- Authors
- Simon Yu Kit Fung (Author) - Hong Kong Polytechnic UniversityFerdinand A. Gul (Author) - Monash UniversityJagan Krishnan (Author) - Temple University
- Publication details
- The Accounting Review, Vol.87(4), pp.1281-1307
- Publisher
- American Accounting Association
- DOI
- 10.2308/accr-10275
- ISSN
- 1558-7967
- Organisation Unit
- University of the Sunshine Coast, Queensland; School of Business and Creative Industries
- Language
- English
- Record Identifier
- 99679190002621
- Output Type
- Journal article
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