The Importance of Audit Firm Characteristics and the Drivers of Auditor Change in UK Listed Companies

Beattie, V. and Fearnley, S. (1995) The Importance of Audit Firm Characteristics and the Drivers of Auditor Change in UK Listed Companies. Accounting and Business Research, 25(100), pp. 227-239.




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 fee 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.

Item Type:Articles
Glasgow Author(s) Enlighten ID:Beattie, Prof Vivien
Authors: Beattie, V., and Fearnley, S.
Subjects:H Social Sciences > HF Commerce > HF5601 Accounting
College/School:College of Social Sciences > Adam Smith Business School > Accounting and Finance
Journal Name:Accounting and Business Research
Publisher:Institute of Chartered Accountants in England and Wales
Copyright Holders:Copyright © 1995 Institute of Chartered Accountants in England and Wales
First Published:First published in Accounting and Business Research 25(100):227-239
Publisher Policy:Reproduced with the permission of the publisher

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