Partner industry specialization and audit pricing in the United Kingdom

Mohd Kharuddin, Khairul Ayuni, Basioudis, Ilias G and Hay, David (2019). Partner industry specialization and audit pricing in the United Kingdom. Journal of International Accounting, Auditing and Taxation, 35 , pp. 57-70.


This study investigates the effects of audit partner industry specialization on audit pricing in the UK market. The mandatory disclosure of the name of the engagement partner in the auditor reports of UK public listed companies took effect from April 2008. Given that the identity of the audit partner is now observable to users of financial statements, it can be argued that there may be an incentive for partner-level differentiation in auditing products, and hence, audit quality. This research examines whether auditor industry expertise in the UK is driven by firm, office, or partner level expertise. The fee premium observed in the study is a joint product of firm and partner level of industry expertise with the highest premium occurring when the client is also audited by an industry leading partner. This finding lends support to the argument that industry expertise is uniquely attributable to the individual audit partner’s human capital in terms of their knowledge and experience from leading audit engagements in a particular industry. It also provides evidence that some fee premiums earned by audit firms and documented in prior literature are most probably the product of the individual audit partner’s expertise.

Publication DOI:
Divisions: Aston Business School > Accounting
Additional Information: © 2019, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International
Uncontrolled Keywords: Audit fee premium,Audit partner,Audit pricing,Industry specialization,United Kingdom,Accounting,Finance
Full Text Link: https://dspace. ... ndle/2134/37214
Related URLs: https://www.sci ... sd_search_email (Publisher URL)
http://www.scop ... tnerID=8YFLogxK (Scopus URL)
Published Online Date: 2019-05-18
Published Date: 2019-06-01
Authors: Mohd Kharuddin, Khairul Ayuni
Basioudis, Ilias G ( 0000-0003-3116-2718)
Hay, David



Version: Accepted Version

Access Restriction: Restricted to Repository staff only until 18 May 2021.

License: Creative Commons Attribution Non-commercial No Derivatives

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