Three essays on auditor industry specialization

Ankita Singhvi, University of Texas at El Paso


This dissertation consists of three separate but related essays examining auditor changes, auditor industry specialization and audit fee premiums. The first essay investigates whether audit committee characteristics affect the types of auditor changes from an industry specialist auditor to a non-industry specialist auditor or the reverse. I examine whether selection of an external auditor is affected by audit committee characteristics such as: 1) number of meetings, 2) number of members on the audit committee, 3) proportion of auditing experts and, 4) proportion of financial experts. The findings show that a greater proportion of auditing experts on the audit committee positively influences the switch from a non-industry specialist to an industry specialist auditor, while more sizable audit committees lower the probability of firm switching from a specialist to a non-specialist non-big four global audit firm. The second essay examines the association between shareholders' ratification voting on an external auditor and the switch between specialists. For a sample of publicly listed U.S. firms for years 2005-2011, I explore whether the effects of lateral (from one specialist to another or from one non-specialist to another), downward (industry specialist to a non-industry specialist) and upward (non-industry specialist to an industry specialist) switches affect shareholder ratification of the selected audit firm. The findings show that downward switches are viewed more negatively than upward switches. Further, there is limited evidence of differences in voting outcomes between downward and lateral switches. The third essay explores whether audit fee premiums for firms cross-listed on the US stock exchanges are higher for firms that hire specialists. This essay uses a sample of firms cross-listed on the US stock exchanges, and explores whether culture moderates the relationship between choice of a specialist and audit fee premiums. The findings show that specialization premiums vary with the secrecy dimension. Directions for future research are suggested and potential implications for regulators and policy makers are discussed.

Subject Area

Accounting|Business administration

Recommended Citation

Singhvi, Ankita, "Three essays on auditor industry specialization" (2014). ETD Collection for University of Texas, El Paso. AAI3623462.