Note on Audit Fee Premiums to Client Size and Industry Specialization

24 Pages Posted: 18 Sep 2007

See all articles by Elizabeth Carson

Elizabeth Carson

University of New South Wales

Neil L. Fargher

Australian National University (ANU)

Abstract

This research note examines the impact of client size on the estimation of audit fee premiums in the Australian market for audit services. Previous research suggests that higher audit fees are expected for both larger clients and for industry specialization. We find that in the Australian market for audit services, the fee premium attributed to industry specialist audit firms is concentrated in the audit fees paid by the largest clients in each industry. One reason for higher fees paid by larger clients is the demand for additional audit services. We find higher fees for companies cross-listed on US exchanges. We also find that fee premiums to auditors that are city-industry leaders are strongly related to client size.

JEL Classification: M49, G15, L84

Suggested Citation

Carson, Elizabeth and Fargher, Neil L., Note on Audit Fee Premiums to Client Size and Industry Specialization. Accounting and Finance, Vol. 47, No. 3, pp. 423-446, September 2007. Available at SSRN: https://ssrn.com/abstract=1014694 or http://dx.doi.org/10.1111/j.1467-629X.2007.00213.x

Elizabeth Carson (Contact Author)

University of New South Wales ( email )

Sydney, NSW 2052
Australia
+612 9385 5822 (Phone)
+612 9385 5925 (Fax)

Neil L. Fargher

Australian National University (ANU) ( email )

Canberra, Australian Capital Territory 2601
Australia

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