Skip navigation
Skip navigation

The Impact of R&D Intensity on Demand for Specialist Auditor Services

Godfrey , Jayne; Hamilton, Jane C

Description

The audit fee research literature argues that auditors' costs of developing brand name reputations, including top-tier designation and recognition for industry specialization, are compensated through audit fee premiums. Audited firms reduce agency costs by engaging high-quality auditors who monitor the levels and reporting of discretionary expenditures and accruals. In this study we examine whether specialist auditor choice is associated with a particular discretionary expenditure - research...[Show more]

dc.contributor.authorGodfrey , Jayne
dc.contributor.authorHamilton, Jane C
dc.date.accessioned2015-12-07T22:40:57Z
dc.identifier.issn0823-9150
dc.identifier.urihttp://hdl.handle.net/1885/24090
dc.description.abstractThe audit fee research literature argues that auditors' costs of developing brand name reputations, including top-tier designation and recognition for industry specialization, are compensated through audit fee premiums. Audited firms reduce agency costs by engaging high-quality auditors who monitor the levels and reporting of discretionary expenditures and accruals. In this study we examine whether specialist auditor choice is associated with a particular discretionary expenditure - research and development (R&D). For a large sample of U.S. companies from a range of industries, we find strong evidence that R&D intensity is positively associated with firms' choices of auditors who specialize in auditing R&D contracts. Additionally, we find that R&D intensive firms tend to appoint top-tier auditors. We use simultaneous equations to control for interrelationships between dependent variables in addition to single-equation ordinary least squares (OLS) and logistic regression models. Our results are particularly strong in tests using samples of small firms whose auditor choice is not constrained by the need to appoint a top-tier auditor to ensure the auditor's financial independence from the client.
dc.publisherCanadian Academic Accounting Association
dc.sourceContemporary Accounting Research
dc.subjectKeywords: Auditor choice; Auditors; Research and development; Specialization
dc.titleThe Impact of R&D Intensity on Demand for Specialist Auditor Services
dc.typeJournal article
local.description.notesImported from ARIES
local.identifier.citationvolume22
dc.date.issued2005
local.identifier.absfor150199 - Accounting, Auditing and Accountability not elsewhere classified
local.identifier.ariespublicationu4602557xPUB30
local.type.statusPublished Version
local.contributor.affiliationGodfrey , Jayne , College of Business and Economics, ANU
local.contributor.affiliationHamilton, Jane C, University of Technology Sydney
local.description.embargo2037-12-31
local.bibliographicCitation.issue1
local.bibliographicCitation.startpage55
local.bibliographicCitation.lastpage93
local.identifier.doi10.1506/P9FJ-EKAL-FPJQ-CM9N
local.identifier.absseo900199 - Financial Services not elsewhere classified
dc.date.updated2015-12-07T10:55:44Z
local.identifier.scopusID2-s2.0-15544385428
CollectionsANU Research Publications

Download

File Description SizeFormat Image
01_Godfrey _The_Impact_of_R&D_Intensity_on_2005.pdf169.37 kBAdobe PDF    Request a copy


Items in Open Research are protected by copyright, with all rights reserved, unless otherwise indicated.

Updated:  19 May 2020/ Responsible Officer:  University Librarian/ Page Contact:  Library Systems & Web Coordinator