Accounting - Theses
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ItemSpecialisation in the market for audit and related services: supply and demand side characteristics at industry and client levels( 2002)This PhD study considers both the supply of, and demand for, audit firm industry specialisation in the market for listed company audits within Australia. In order to investigate the concept of auditing industry specialisation, the concept needs to be both defined and operationalised. At present, there exists no generally accepted definition or unambiguous measure of auditor industry specialisation. This study seeks to gain a better understanding of the dynamics of and incentives within the market for industry specialist audit services, and secondly, investigate important related issues such as the appropriate unit of analysis when measuring audit industry specialisation. The researcher followed a structured interview process of the suppliers of industry specialist audit services, in this case all the Big Five and a sample of their large and small corporate auditees. Then a framework was developed that enabled archival data to be analysed, and the subsequent empirical results indicate the following. The results of the interview and archival research indicate the existence of two theorized dimensions, one being the existence of a dimension driven by industry wide factors, and the second being a dimension driven by company-specific factors. The interviews indicate that different industries require different levels of audit industry specialisation. The archival research conveys that the pricing of audit engagements depends on both the level of audit specialisation required due to industry wide factors (dimension one), or the level of audit industry specialisation demanded by particular clients, which is dependent more on company-specific factors (dimension two). What has been found in the statistical analysis for the total population (period 1990-95) using the claim audit specialisation model, is that, for the highly regulated and more technical industries (such as mining and financial services, etc) audit fee discounting tends to dominate. In sum, the current research study provides new evidence for the period 1990-1995, that in fact production economies tend to dominate positive returns on investment in audit specialisation, and in fact it is only for a small sample of specific companies, where in fact positive returns on investment in audit specialisation are observed.