Auditor industry specialization, service bundling, and partner effects in a mining-dominated city

Ferguson, A; Pündrich, G; Raftery, A

Auditor industry specialization, service bundling, and partner effects in a mining-dominated city

Ferguson, A

Pündrich, G Raftery, A

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Publication Type:: Journal Article
Citation:: Auditing, 2014, 33 (3), pp. 153 - 180
Issue Date:: 2014-01-01

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Field	Value	Language
dc.contributor.author	Ferguson, A https://orcid.org/0000-0003-0535-0643	en_US
dc.contributor.author	Pündrich, G	en_US
dc.contributor.author	Raftery, A	en_US
dc.date.issued	2014-01-01	en_US
dc.identifier.citation	Auditing, 2014, 33 (3), pp. 153 - 180	en_US
dc.identifier.issn	0278-0380	en_US
dc.identifier.uri	http://hdl.handle.net/10453/121949
dc.description.abstract	© 2014, American Accounting Association. All rights reserved. This study examines auditor industry specialization effects in Perth, a remote mining town in Australia characterized by a large number of small, homogeneous firms. We consider the impact of leadership by the non-Big 4 auditor BDO Kendalls (BDO) for a sample of 371 mining development stage entities (MDSEs). After controlling for factors known to determine audit fees, we find no evidence of auditor industry leadership fee premiums accruing to BDO, a result robust to a range of sensitivity tests including the broadening of tests Australia-wide. However, when the dependent variable is redefined to the total ‘‘bundle’’ of services provided by the audit firm (including audit and non-audit fees), the industry leader is shown to earn a fee premium suggesting BDO uses audits as a conduit to supply higher-margin non-audit services. Our findings suggest that strategic pricing by industry leaders may not be confined to Big 4 firms.	en_US
dc.relation.ispartof	Auditing	en_US
dc.relation.isbasedon	10.2308/ajpt-50728	en_US
dc.subject.classification	Accounting	en_US
dc.title	Auditor industry specialization, service bundling, and partner effects in a mining-dominated city	en_US
dc.type	Journal Article
utslib.citation.volume	3	en_US
utslib.citation.volume	33	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	3	en_US
pubs.publication-status	Published	en_US
pubs.volume	33	en_US

Abstract:

© 2014, American Accounting Association. All rights reserved. This study examines auditor industry specialization effects in Perth, a remote mining town in Australia characterized by a large number of small, homogeneous firms. We consider the impact of leadership by the non-Big 4 auditor BDO Kendalls (BDO) for a sample of 371 mining development stage entities (MDSEs). After controlling for factors known to determine audit fees, we find no evidence of auditor industry leadership fee premiums accruing to BDO, a result robust to a range of sensitivity tests including the broadening of tests Australia-wide. However, when the dependent variable is redefined to the total ‘‘bundle’’ of services provided by the audit firm (including audit and non-audit fees), the industry leader is shown to earn a fee premium suggesting BDO uses audits as a conduit to supply higher-margin non-audit services. Our findings suggest that strategic pricing by industry leaders may not be confined to Big 4 firms.

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

http://hdl.handle.net/10453/121949