Three essays in financial accounting and auditing
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Authors
Siraj, Ibrhaim
Issue Date
2018-08
Type
Electronic thesis
Thesis
Thesis
Language
ENG
Keywords
Management
Alternative Title
Abstract
In chapter 1, I examine the audit pricing and audit quality of the conglomerate clients with respect to the expertise of the auditors. While existing literature recognizes the role of auditors’ industry specialization in influencing audit fees and audit quality, I argue that the diversified experience of auditors gained from serving firms from different industries should also matter, particularly for the multi-segment firms. I find that the auditors with diversified experience, a measure capturing both the extent at which an auditor is experienced in different industries and the usefulness of that experience to a conglomerate client, are highly likely to charge significant fee premium. Additionally, diversified firms and the firms reorganized from single-segment to multi-segment experience an increase in fees when they switch to a better experienced auditor. Further evidence confirms that it is the pricing of diversified experience, not the pricing of more auditing effort, that results in a fee premium. In examining of audit quality, I find that conglomerates audited by more diversified auditors are likely to have a lower level of discretionary accruals, and a lower likelihood of restatements. The results are robust to the use of audit fees of conglomerates comparing with the comparable portfolio of audits fess of standalone firms, and to the concern of endogenous process of auditor selection.
Description
August 2018
School of Management
School of Management
Full Citation
Publisher
Rensselaer Polytechnic Institute, Troy, NY