An Empirical Investigation of the Audit Market in the U.S. Healthcare Sector

Journal of Public Budgeting, Accounting, and Financial Management, 24(4): 639-659, 2012

Posted: 27 Jan 2017

See all articles by Xiaoli Yuan

Xiaoli Yuan

Elizabeth City State University

Dana A. Forgione

University of Texas at San Antonio - College of Business

Dennis M. Lopez

University of Texas at San Antonio

Date Written: 2012

Abstract

The purpose of this paper is to analyze the market for audit services for publicly traded companies operating in the US for-profit (FP) healthcare sector. Complex national and local healthcare laws and regulations suggest the importance of assessing fee effects of joint national-level and city specific expertise among auditors. Using cross-sectional OLS regression analysis, we find that joint expertise significantly affects audit pricing in the healthcare sector. We find a fee premium of 33.6 percent on engagements where auditors are both national and city-specific specialists. We also find that Big-4 auditor reputation is significantly priced in addition to joint auditor expertise, and a significant positive association exists between audit and non-audit service fees — indicating the presence of knowledge spillover effects among healthcare company auditors.

Keywords: Audit Fees, Big-4 Firms, Healthcare, Industry Expertise, Knowledge Spillover

JEL Classification: M40, M41, M42, M48, M49

Suggested Citation

Yuan, Xiaoli and Forgione, Dana A. and Lopez, Dennis M., An Empirical Investigation of the Audit Market in the U.S. Healthcare Sector (2012). Journal of Public Budgeting, Accounting, and Financial Management, 24(4): 639-659, 2012. Available at SSRN: https://ssrn.com/abstract=2906512

Xiaoli Yuan (Contact Author)

Elizabeth City State University ( email )

1704 Weeksville Rd
Elizabeth City, NC 27909
United States

Dana A. Forgione

University of Texas at San Antonio - College of Business ( email )

One UTSA Circle
San Antonio, TX 78249
United States
+1.210.458.6318 (Phone)
+1.810.815.5378 (Fax)

HOME PAGE: http://www.utsa.edu

Dennis M. Lopez

University of Texas at San Antonio ( email )

One UTSA Circle
San Antonio, TX 78249
United States
210-458-4320 (Phone)
210-458-4322 (Fax)

HOME PAGE: http://business.utsa.edu/

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