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The importance of audit firm characteristics and the drivers of auditor change in UK listed companies

Beattie, Vivien and Fearnley, Stella (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. ISSN 0001-4788

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Abstract

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 Ice 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: Article
Journal or Publication Title: Accounting and Business Research
Subjects:
Departments: Lancaster University Management School > Accounting & Finance
ID Code: 66465
Deposited By: ep_importer_pure
Deposited On: 17 Sep 2013 09:11
Refereed?: Yes
Published?: Published
Last Modified: 14 Sep 2017 03:26
Identification Number:
URI: http://eprints.lancs.ac.uk/id/eprint/66465

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