Abstract:
Ferguson et al. (2003) report that audit industry fee premia primarily reside with
joint national and city-specific industry leadership as opposed to merely firm-wide
(national) industry expertise, suggesting auditor choice among the Big 5 is best conceptualizcd
on joint industry specialization in city-specific markets and nationally.
The present study examines whether the prior results could be confounded by the
presence of city-specific overall market leadership effects. Our findings reaffirm that
joint local and national auditor industry expertise is valued by audit clients, Furthermore,
overall city-specific leadership, by itself, also matters in fee determination and
results in higher fees, although at a slightly weaker level of statistical significance.
