The effects of firm-wide and office-level industry expertise on audit pricing
This study examines the role of auditor Industry expertise In the pricingof Big 5 audits In Australia. We test If the audit market prices an auditor's firm-wideIndustry expertise, or alternatively If the audit market only prices office-level expertisein those specific cities where the auditor is the Industry leader. We document that thereIs an average premium of 24 percent associated with industry expertise when the auditoris both the city-specific Industry leader and one of the top two firms nationally Inthe industry. However, the top two firms nationally do not earn a premium In citieswhere they are not city leaders. We further document that national leadership rankingsare, 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 expertisein Australia is primarily based on office-level Industry leadership in city-specificaudit markets.
Year of publication: |
2003
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Authors: | Ferguson Andrew ; Francis Jere ; Stokes Donald |
Publisher: |
American Accounting Association |
Saved in:
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