Large Audit Firm Premium and Audit Specialisation in the Public Sector

23 Pages Posted: 6 Sep 2017

Date Written: September 2017

Abstract

The outsourcing of public‐sector audits to the private sector is an important issue. This study examines the fee premium in the public sector by comparing audit fees between the government auditor and the Big5. The study (i) statistically adjusts for self‐selection bias, (ii) allows the slope coefficients in the audit fee model to vary between the Big5 and the government audit and (iii) estimates the counterfactual audit fee premium. The Big5 premium is around 23 percent. However, the variation in premium depends on whether the Big5 auditor is an industry or city specialist.

Keywords: Audit fees, Public sector, Audit premium, Self‐selection, Industry specialist, City specialist

Suggested Citation

Bradbury, Michael E., Large Audit Firm Premium and Audit Specialisation in the Public Sector (September 2017). Accounting & Finance, Vol. 57, Issue 3, pp. 657-679, 2017. Available at SSRN: https://ssrn.com/abstract=3032130 or http://dx.doi.org/10.1111/acfi.12167

Michael E. Bradbury (Contact Author)

Massey University ( email )

School of Accountancy
Private Bag 102 904
Auckland
New Zealand
64 9 414 0800 (Phone)
64 9 441 8133 (Fax)

Register to save articles to
your library

Register

Paper statistics

Downloads
0
Abstract Views
104
PlumX Metrics