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Audit Firm Industry Specialization As A Differentiation Strategy: Evidence From Fees Charged To Firms Going Public, Brian W. Mayhew, Michael S. Wilkins
Audit Firm Industry Specialization As A Differentiation Strategy: Evidence From Fees Charged To Firms Going Public, Brian W. Mayhew, Michael S. Wilkins
Michael S Wilkins
This paper examines IPO assurance fees to assess the use of industry specialization as a differentiation strategy by audit firms. Theory suggests that as an audit firm’s share of a client industry increases their costs will decrease and their service quality to that industry will increase. In this setting, the impact of industry specialization on fees is indeterminate. We extend existing theory by considering both the supply and the demand for industry specialization. We conclude that the market for audit services is generally price-competitive, suggesting that auditors will be forced to share cost savings with clients. However, when an audit …
An Investigation Of The Pricing Of Audit Services For Financial Institutions, L. Fields, Donald Fraser, Michael Wilkins
An Investigation Of The Pricing Of Audit Services For Financial Institutions, L. Fields, Donald Fraser, Michael Wilkins
Michael S Wilkins
In this paper we investigate audit pricing for financial institutions. We modify the standard audit fee model for industrial companies by incorporating measures of risk and complexity that are either unique to or more relevant for banks, and that are used by bank regulatory agencies. For a sample of 277 financial institutions in fiscal 2000, we find that audit fees are higher for banks having more transactions accounts, fewer securities as a percentage of total assets, lower levels of efficiency, and higher degrees of credit risk. Higher fees also obtain for savings institutions, for banks that are more involved in …