The Pricing of National and City-Specific Reputations for Industry Expertise in the U.S. Audit Market

The pricing of Big 5 industry leadership in the U.S. audit market is investigated using audit fee disclosures for the 2000–2001 fiscal years and the joint nationalcity framework in Ferguson et al. (2003). There is a significant fee premium of 19 percent on those engagements where Big 5 auditors are both the nationally top-ranked auditor and the city-level industry leader in the city where the client is headquartered, indicating that national and city-specific industry leadership jointly affect auditor reputation and pricing. However, there is never a premium in any tests for auditors that are national industry leaders alone without also being city-specific industry leaders, indicating that national leadership…