Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/89684
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dc.contributorSchool of Accounting and Financeen_US
dc.creatorFung, MKen_US
dc.creatorCheng, LTWen_US
dc.creatorLeung,TYen_US
dc.date.accessioned2021-04-28T02:29:14Z-
dc.date.available2021-04-28T02:29:14Z-
dc.identifier.issn1752-0479en_US
dc.identifier.urihttp://hdl.handle.net/10397/89684-
dc.language.isoenen_US
dc.publisherInterScienceen_US
dc.rightsCopyright © 2019 Inderscience Enterprises Ltd.en_US
dc.rightsThe following publication Fung, M. K., Cheng, L. T. W., & Leung, T. -. (2019). The signalling cost of hiring a large auditor: Evidence from the fee differential between large and small auditors. International Journal of Monetary Economics and Finance, 12(3), 196-211 is available at https://www.inderscience.com/info/inarticle.php?artid=100620.en_US
dc.subjectAsymmetric informationen_US
dc.subjectSignallingen_US
dc.subjectFinancial audit marketen_US
dc.subjectPrice differentialen_US
dc.titleThe signalling cost of hiring a large auditor : evidence from the fee differential between large and small auditorsen_US
dc.typeJournal/Magazine Articleen_US
dc.identifier.spage196en_US
dc.identifier.epage211en_US
dc.identifier.volume12en_US
dc.identifier.issue3en_US
dc.identifier.doi10.1504/IJMEF.2019.100620en_US
dcterms.abstractThe market for financial auditing is highly concentrated. If large auditors audit with greater accuracy, hiring a large auditor signals the firm's financial report quality to investors. This study considers the competition between large and small auditors and analytically shows that the fee differential between them consists of their audit cost difference and the signalling cost of hiring the former. The negative signal associated with a downward auditor switch is a switching cost. Large auditors therefore cannot compete with small auditors if the former perform no signalling function. The analytical model is empirically estimated to show the magnitude of the signalling cost embedded in a large auditor's audit and non-audit fees. Findings suggest that non-audit fees contain a larger signalling cost component than audit fees do. Moreover, auditees with higher financial report quality are willing to pay a higher signalling cost to signal their financial report quality.en_US
dcterms.accessRightsopen accessen_US
dcterms.bibliographicCitationInternational journal of monetary economics and finance, 2019, v. 12, no. 3, p. 196-211en_US
dcterms.isPartOfInternational journal of monetary economics and financeen_US
dcterms.issued2019-
dc.description.validate202104 bcvcen_US
dc.description.oaAccepted Manuscripten_US
dc.identifier.FolderNumbera0839-n01, RGC-B1-032en_US
dc.identifier.SubFormID1728-
dc.description.fundingSourceRGCen_US
dc.description.fundingTextPolyU 155039/17Ben_US
dc.description.pubStatusPublisheden_US
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