TY - JOUR
T1 - The Effect of Audit Partner Digitalization Expertise on Audit Fees
AU - Maghakyan, Arpine
AU - Jarva, Henry
AU - Niemi, Lasse
AU - Sihvonen, Jukka
N1 - Funding Information:
We thank Beatriz García Osma (editor), two anonymous reviewers, Mai Dao, David Hay, Sven Hörner, Seppo Ikäheimo, Emma-Riikka Myllymäki, Savvas Papadopoulos, Stefan Sundgren, Ann Vanstraelen, Marleen Willekens, Steven Young, participants at the EARNet Symposium 2023, the 2021 Hawai̒i Accounting Research Conference, the 2019 EARNet Doctoral Workshop, the 2019 EAA Doctoral Colloquium, the 2019 Ph.D. Colloquium at Victoria University of Wellington, and the seminar participants at Aalto University, University of Vaasa, and The University of Auckland for numerous comments and suggestions. Arpine Maghakyan acknowledges the HSE Foundation, the Jenny and Antti Wihuri Foundation, the OP Foundation, the Marcus Wallenberg Foundation, and the Foundation for Economic Education for their financial support. All errors are our own.
Publisher Copyright:
© 2023 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group.
PY - 2024/1/3
Y1 - 2024/1/3
N2 - This study focuses on the effects of digitalization on the auditing industry and the impact of audit partner expertise in digitalization on audit fees. Using data from listed U.S. companies between 2016 and 2021, we document a statistically and economically significant audit fee premium for audit partners who specialize in digitalization. This premium is separate from the partner’s industry specialization and is strongest in industries with a high level of digitalization, especially during the first half of the sample period. Our subsample analysis shows that, while the premium appears to be diminishing in less digitalized industries, it remains significant in highly digitalized industries. This change may be due to the general increase in digitalization expertise among audit partners, leading to diminishing returns to specialization for less digitalized audits.
AB - This study focuses on the effects of digitalization on the auditing industry and the impact of audit partner expertise in digitalization on audit fees. Using data from listed U.S. companies between 2016 and 2021, we document a statistically and economically significant audit fee premium for audit partners who specialize in digitalization. This premium is separate from the partner’s industry specialization and is strongest in industries with a high level of digitalization, especially during the first half of the sample period. Our subsample analysis shows that, while the premium appears to be diminishing in less digitalized industries, it remains significant in highly digitalized industries. This change may be due to the general increase in digitalization expertise among audit partners, leading to diminishing returns to specialization for less digitalized audits.
KW - 512 Business and Management
KW - audit partner expertise
KW - auditor specialization
KW - audit fees
KW - digitalization
KW - audit technology
UR - http://www.scopus.com/inward/record.url?scp=85181456491&partnerID=8YFLogxK
U2 - 10.1080/09638180.2023.2298433
DO - 10.1080/09638180.2023.2298433
M3 - Article
SN - 0963-8180
JO - European Accounting Review
JF - European Accounting Review
ER -