The effects of firm-wide and office-level industry expertise on audit pricing

Ferguson, A; Francis, JR; Stokes, DJ

The effects of firm-wide and office-level industry expertise on audit pricing

Ferguson, A

Francis, JR Stokes, DJ

Permalink

Publication Type:: Journal Article
Citation:: Accounting Review, 2003, 78 (2), pp. 429 - 448
Issue Date:: 2003-01-01

Closed Access

	Filename	Description	Size
	2003000497.pdf		1.25 MB	Adobe PDF	View/Open

Copyright Clearance Process

Recently Added
In Progress
Closed Access

This item is closed access and not available.

Full metadata record

Field	Value	Language
dc.contributor.author	Ferguson, A https://orcid.org/0000-0003-0535-0643	en_US
dc.contributor.author	Francis, JR	en_US
dc.contributor.author	Stokes, DJ	en_US
dc.date.issued	2003-01-01	en_US
dc.identifier.citation	Accounting Review, 2003, 78 (2), pp. 429 - 448	en_US
dc.identifier.issn	0001-4826	en_US
dc.identifier.uri	http://hdl.handle.net/10453/6453
dc.description.abstract	This study examines the role of auditor industry expertise in the pricing of Big 5 audits in Australia. We test if the audit market prices an auditor's firm-wide industry expertise, or alternatively if the audit market only prices office-level expertise in those specific cities where the auditor is the industry leader. We document that there is an average premium of 24 percent associated with industry expertise when the auditor is both the city-specific industry leader and one of the top two firms nationally in the industry. However, the top two firms nationally do not earn a premium in cities where they are not city leaders. We further document that national leadership rankings are, in fact, driven by the specific offices where accounting firms are city leaders. Thus, the overall evidence supports that the market perception and pricing of industry expertise in Australia is primarily based on office-level industry leadership in city-specific audit markets.	en_US
dc.relation.ispartof	Accounting Review	en_US
dc.relation.isbasedon	10.2308/accr.2003.78.2.429	en_US
dc.subject.classification	Accounting	en_US
dc.title	The effects of firm-wide and office-level industry expertise on audit pricing	en_US
dc.type	Journal Article
utslib.citation.volume	2	en_US
utslib.citation.volume	78	en_US
utslib.for	150103 Financial Accounting	en_US
utslib.for	1501 Accounting, Auditing and Accountability	en_US
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Accounting Discipline
utslib.copyright.status	closed_access
pubs.issue	2	en_US
pubs.publication-status	Published	en_US
pubs.volume	78	en_US

Abstract:

This study examines the role of auditor industry expertise in the pricing of Big 5 audits in Australia. We test if the audit market prices an auditor's firm-wide industry expertise, or alternatively if the audit market only prices office-level expertise in those specific cities where the auditor is the industry leader. We document that there is an average premium of 24 percent associated with industry expertise when the auditor is both the city-specific industry leader and one of the top two firms nationally in the industry. However, the top two firms nationally do not earn a premium in cities where they are not city leaders. We further document that national leadership rankings are, in fact, driven by the specific offices where accounting firms are city leaders. Thus, the overall evidence supports that the market perception and pricing of industry expertise in Australia is primarily based on office-level industry leadership in city-specific audit markets.

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10453/6453