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The effect of partner digitalization expertise on audit fees
|Title:||The effect of partner digitalization expertise on audit fees|
|Keywords:||Audit Partner Expertise|
|Date Issued:||14 Aug 2020|
|Abstract:||We document a fee premium for audit partners who have gained expertise in digitalization by specializing in highly or similarly digitalized clients. Overall, our evidence is consistent with the view that the digitalization of a client's business and information systems provides audit partners an opportunity to differentiate themselves as experts in digitalization and earn a fee premium. In our sample of listed and private firms in Finland, we find a fee premium of 13—35%. For U.S.-listed companies, we document a fee premium of 63—65%. This study contributes to archival research on auditor expertise and audit pricing by showing that expertise in digitalization is separate from industry-specific and generic knowledge accumulated by years in the profession, enhancing our understanding of the nature of auditing in the current audit environment.|
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