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Industry Specialization And Auditor Quality In Us Markets, Brian Cadman, Michael T. Stein

Accounting Faculty Publications

This study investigates the relation between audit quality, auditor industry market share, and audit fees. Prior literature has asserted that audit providers with high market shares can be designated as industry specialists and that the fee premiums that sometimes attach to these auditors is evidence of a quality differentiated audit product. Using data from the U.S. audit market for the fiscal year 2003 we extend this literature by investigating the relationships among audit fee premiums, auditor market shares, and two dimensions of audit quality: external reporting and economies of scope in providing joint audit and non-audit services. We find little …