The Effects of Supply-Chain Knowledge Spillover on Audit Pricing

Posted: 20 Dec 2011 Last revised: 7 Nov 2017

See all articles by Hsihui Chang

Hsihui Chang

Drexel University

Hsin-Chi Chen

I-Shou University

Jengfang Chen

Macquarie University

Sungsoo Kim

Rutgers Business School - Camden; University of Minnesota Duluth

Date Written: December 20, 2011


This study examines the effects of auditors’ supply-chain knowledge spillover on audit pricing. Analyzing data from audit analytics for the period from 2003-2009, we find that an auditor with supply-chain knowledge offers reduced audit fees. Specifically, the auditor with joint supplier-buyer-related knowledge and buyer-related knowledge discounts its audit fees, but not with supplier-related knowledge alone. The fee discount is larger when the auditor has supplier-chain knowledge at the office level than when the auditor has such knowledge at the audit firm level. Our findings are robust to the use of alternate measures of supply-chain knowledge as well as the analysis of the restricted sample comprising only supply chain companies.

Keywords: supply chain specialization, audit fees, suppliers, major buyers

Suggested Citation

Chang, Hsihui and Chen, Hsin-Chi and Chen, Jengfang and Kim, Sungsoo, The Effects of Supply-Chain Knowledge Spillover on Audit Pricing (December 20, 2011). Available at SSRN:

Hsihui Chang

Drexel University ( email )

3141 Chestnut St
Philadelphia, PA 19104
United States

Hsin-Chi Chen

I-Shou University ( email )

1, Section 1, Hsueh-Cheng Rd.
Ta-Hsu Hsiang
Taiwan 840

Jengfang Chen (Contact Author)

Macquarie University ( email )

Sungsoo Kim

Rutgers Business School - Camden ( email )

227 Penn Street
Camden, NJ 08102
United States
856-225-6584 (Phone)

University of Minnesota Duluth ( email )

10 University Avenue
Duluth, MN 55812
United States

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