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Auditor industry expertise and external audit prices: empirical evidence from Amman Stock Exchange-listed companies

Author

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  • Esraa Esam Alharasis
  • Manal Alidarous
  • Fouad Jamaani

Abstract

Purpose - This study aims to examine the relationship between auditor industry specialization (IS) and audit fees. Design/methodology/approach - The authors utilize 2,100 firm-year data of Jordanian companies from 2005 to 2018. Two conflicting theoretical approaches of IS were employed: the product differentiation approach, as assessed by market share (MS); and the shared efficiency approach, as evaluated by portfolio share (PS). Findings - Results of the ordinary least squares (OLS) regression support product differentiation (shared efficiency) and show that employing experts' auditors exerts a very substantial and favorable direct impact on audit fees (negative). Originality/value - This research contributes new empirical data to the auditing literature by examining if IS does influence Jordanian businesses' audit fees. The findings offer useful data for Jordanian officials to examine the auditing industry's difficulties while refining regulations and revising auditor pricing. Additionally, the results offer advice to Jordan's regulatory bodies who oversee the auditing industry. Arguably, results from Jordan may be extrapolated to other Middle Eastern nations.

Suggested Citation

  • Esraa Esam Alharasis & Manal Alidarous & Fouad Jamaani, 2022. "Auditor industry expertise and external audit prices: empirical evidence from Amman Stock Exchange-listed companies," Asian Journal of Accounting Research, Emerald Group Publishing Limited, vol. 8(1), pages 94-107, October.
    • Handle: RePEc:eme:ajarpp:ajar-02-2022-0051
    DOI: 10.1108/AJAR-02-2022-0051
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