Auditors’ Technological Proximity Knowledge

Yue He, Jeong Bon Kim, Bing Li, Zhenbin Liu

Research output: Contribution to journalJournal articlepeer-review

Abstract

We exploit the technological closeness among clients of the same auditor to examine whether auditors accumulate knowledge from their clients’ technological proximity. We find that a client firm’s technological proximity to other clients of its audit office improves audit quality and results in an audit fee discount, even after controlling for the product similarity effect, auditors’ overall technological expertise, and industry specialization. Both an increase in audit quality and a decrease in audit fees occur if a client firm exhibits greater technological similarity to clients of other audit offices within the same audit firm. Our findings suggest that the auditors’ technological proximity knowledge enhances the effectiveness and efficiency of audit work at both the audit firm and audit office levels.
Original languageEnglish
Pages (from-to)323-351
Number of pages29
JournalAccounting Review
Volume98
Issue number5
Early online date23 May 2023
DOIs
Publication statusPublished - Sept 2023

Scopus Subject Areas

  • Economics and Econometrics
  • Accounting
  • Finance

User-Defined Keywords

  • audit fees
  • audit quality
  • auditors’ technological proximity knowledge
  • technological proximity
  • auditors' technological proximity knowledge

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