The effect of audit partner digitalization expertise on audit fees

Maghakyan, A. , Jarva, H., Niemi, L. and Sihvonen, J. (2024) The effect of audit partner digitalization expertise on audit fees. European Accounting Review, (doi: 10.1080/09638180.2023.2298433) (Early Online Publication)

Abstract

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.

• Item Type: Articles
• Additional Information: Funding: This work was supported by Jenny ja Antti Wihurin Rahasto; Liikesivistysrahasto; Marcus Wallenberg Foundation; OP Foundation; Helsinki School of Economics (HSE) Foundation.
• Status: Early Online Publication
• Refereed: Yes
• Glasgow Author(s) Enlighten ID: Maghakyan, Dr Arpine
• Authors: Maghakyan, A., Jarva, H., Niemi, L., and Sihvonen, J.
• College/School: College of Social Sciences > Adam Smith Business School > Accounting and Finance
• Journal Name: European Accounting Review
• Publisher: Taylor and Francis
• ISSN: 0963-8180
• ISSN (Online): 1468-4497
• Published Online: 03 January 2024
• Copyright Holders: Copyright © 2023 The Author(s).
• First Published: First published in European Accounting Review 2024
• Publisher Policy: Reproduced under a Creative Commons license