What question did this study set out to answer?

This research aims to analyze how industry specialization by auditors affects audit pricing based on client bargaining power.

March 1, 2004Auditing A Journal of Practice & Theory

Auditor Industry Specialization, Client Bargaining Power, and Audit Pricing

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Authors

JCJeffrey R. CasterellaUniversity of Auckland JFJere R. FrancisUniversity of Missouri BLBarry L. LewisColorado State University

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Implication

This randomized trial examines audit fees relative to auditor specialization and client size, suggesting that smaller clients pay more due to limited bargaining power.

Key Points

This research aims to analyze how industry specialization by auditors affects audit pricing based on client bargaining power.
Analyzed audit pricing data from Big 6 firms in the U.S. audit market.
Examined the relationship between client size, industry specialization, and audit fees.
Compared audit fees for smaller clients (<$123 million in assets) against larger clients.
Smaller companies pay higher fees when using Big 6 industry specialists.
Larger companies do not pay a premium for specialist auditors, with fees decreasing relative to auditor-client industry specialization.
Higher fees correlate with lower client bargaining power, impacted by company size.

Cite This Study

Casterella et al. (2004) studied this question.

synapsesocial.com/papers/69de6c19bf539e22705588c1 https://doi.org/10.2308/aud.2004.23.1.123

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Implication

This randomized trial examines audit fees relative to auditor specialization and client size, suggesting that smaller clients pay more due to limited bargaining power.

Auditor Industry Specialization, Client Bargaining Power, and Audit Pricing

Discussion

Member takes

Implication

Key Points

Cite This Study

Auditor Industry Specialization, Client Bargaining Power, and Audit Pricing

Discussion

Member takes

Implication

Key Points

Cite This Study

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