An exploratory study of the effects of product differentiation and economies of scale on external audit fees /
| Main Author: | |
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| Other Authors: | , , , |
| Format: | Thesis Book |
| Language: | English |
| Published: |
1988.
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| Subjects: | |
| Online Access: | ProQuest, Abstract Link to OAKTrust copy |
| Abstract: | Several studies have provided empirical evidence concerning the pricing of audit services among different audit firms. These studies have primarily emphasized the Big 8/non-Big 8 firm dichotomy with no consideration being given to the second-tier as well as other local/regional firms that comprise the non-Big 8 firm size category. These researchers have attempted to address whether observed pricing differences among the audit firms can be attributable to a differentiated product and/or economies of scale. Some of the results have been consistent and some have been inconsistent across studies. Generalized linear models were constructed for the functional relationships between external audit fees and the independent variables measuring the effect of audit firm size, industry regulatory complexity, and client capital market activity. Other factors such as the asset size, complexity of operations, and financial distress of the auditee are controlled for in the cross-sectional models. The primary purpose of this dissertation is to provide evidence concerning audit price differences observed and whether these differences can be partly explained by 1) a differentiated product and/or 2) economies of scale accruing to the audit firms. This study explores the non-Big 8 firm category further by partitioning out the effect of the second-tier and other local/regional auditors. The dissertation provides evidence that price premiums charged by audit firms can be observed in certain auditee size categories. These premiums may partly be attributable to a guality differentiated product. There is also evidence of cost savings being passed on to the auditees who operate in a regulated industry. The involvement of the audit firm with security registration statements of the client appears also to result in some economies due to specialized knowledge acquired by the auditor. This dissertation also provides evidence of significant interaction between audit firm size, industry regulatory complexity, and client capital market activity on external audit fees... |
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| Item Description: | Typescript (photocopy). Vita. "Major subject: Accounting." |
| Physical Description: | xi, 117 leaves : illustrations ; 29 cm |
| Bibliography: | Includes bibliographical references (leaves 112-116). |