Client, Industry and Country Factors Affecting Choice of Big N Industry Expert Auditors

52 Pages Posted: 13 Oct 2005 Last revised: 18 Apr 2013

See all articles by Michael Ettredge

Michael Ettredge

University of Kansas - Accounting and Information Systems Area

Chee Yeow Lim

Singapore Management University - School of Accountancy

Soo Young Kwon

Korea University

Date Written: October 9, 2008

Abstract

This study investigates client choice of industry specialist auditors from among the Big N (Big 4 or 5) in an international (non-U.S.) setting. We investigate client-specific, industry-level and country-level factors hypothesized to enhance or decrease Big N clients' demand for industry expertise. Using data for 29 countries and 14 broad industries from 1993-2005, we find that international client choice of industry specialist Big N auditors is positively associated with client size, client growth opportunities, and client capital intensity. The choice of industry specialists from among the Big N is more prevalent in countries where levels of investor protection, quality of financial reporting environment, and national economic development are higher. Clients belonging to regulated industries tend to select industry specialists.

Keywords: Global audit market, industry specialization, audit market shares, audit quality, international auditing, Big N auditors

JEL Classification: G15, L11, M41, M49

Suggested Citation

Ettredge, Michael L. and Lim, Chee Yeow and Kwon, Soo Young, Client, Industry and Country Factors Affecting Choice of Big N Industry Expert Auditors (October 9, 2008). Journal of Accounting, Auditing and Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=820404 or http://dx.doi.org/10.2139/ssrn.820404

Michael L. Ettredge (Contact Author)

University of Kansas - Accounting and Information Systems Area ( email )

1300 Sunnyside Avenue
Lawrence, KS 66045
United States
785-864-7537 (Phone)
785-864-5328 (Fax)

Chee Yeow Lim

Singapore Management University - School of Accountancy ( email )

60 Stamford Road
Singapore 178900
Singapore

Soo Young Kwon

Korea University ( email )

#613 LG-POSCO Hall
145 Anamro, Seongbuk-Gu
Seoul, 136-701
Korea, Republic of (South Korea)
82232901937 (Phone)

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