Research output: Contribution to Journal/Magazine › Journal article › peer-review
Research output: Contribution to Journal/Magazine › Journal article › peer-review
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TY - JOUR
T1 - The importance of audit firm characteristics and the drivers of auditor change in UK listed companies
AU - Beattie, Vivien
AU - Fearnley, Stella
PY - 1995
Y1 - 1995
N2 - This paper explores the importance of audit firm characteristics and the factors motivating auditor change based on questionnaire responses from 210 listed UK companies (a response rate of 70%). Twenty-nine potentially desirable auditor characteristics are identified from the extant literature and their importance elicited. Exploratory factor analysis reduces these variables to eight uncorrelated underlying dimensions: reputation/quality; acceptability to third parties: value for money: ability to provide non-audit services: small audit firm: specialist industry knowledge; non-Big Six large audit firm: and geographical proximity. Insights into the nature of ‘the Big Six factor’ emerge. Two thirds of companies had recently considered changing auditors; the main reasons cited being audit Ice level, dissatisfaction with audit quality and changes in top management. Of those companies that considered change. 73% did not actually do so. the main reasons cited being fee reduction by the incumbent and avoidance of disruption. Thus audit fee levels are both a key precipitator of change and a key factor in retaining the status quo.
AB - This paper explores the importance of audit firm characteristics and the factors motivating auditor change based on questionnaire responses from 210 listed UK companies (a response rate of 70%). Twenty-nine potentially desirable auditor characteristics are identified from the extant literature and their importance elicited. Exploratory factor analysis reduces these variables to eight uncorrelated underlying dimensions: reputation/quality; acceptability to third parties: value for money: ability to provide non-audit services: small audit firm: specialist industry knowledge; non-Big Six large audit firm: and geographical proximity. Insights into the nature of ‘the Big Six factor’ emerge. Two thirds of companies had recently considered changing auditors; the main reasons cited being audit Ice level, dissatisfaction with audit quality and changes in top management. Of those companies that considered change. 73% did not actually do so. the main reasons cited being fee reduction by the incumbent and avoidance of disruption. Thus audit fee levels are both a key precipitator of change and a key factor in retaining the status quo.
U2 - 10.1080/00014788.1995.9729912
DO - 10.1080/00014788.1995.9729912
M3 - Journal article
VL - 25
SP - 227
EP - 239
JO - Accounting and Business Research
JF - Accounting and Business Research
SN - 0001-4788
IS - 100
ER -