Journal of Accounting, Auditing & Finance
Vol 24, Issue 3, 2009
 

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MICHAEL ETTREDGE* So0 YOUNG KWON** CHEE YEOW LIM***
https://doi.org/10.1177/0148558X0902400306


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 twenty-nine countries and fourteen 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