Evidence of Industry Scale Effects on Audit Hours,Billing Rates,and Pricing

Using a proprietary data set consisting of all private firm audit engagements in 2000 from one Big 4 firm in Belgium, we investigate (i) whether audit office industry scale is associated with a reduction of total, partner, and staff audit hours and thus with efficiency gains triggered by organizational learning from servicing more clients in an industry and (ii) whether the extent of efficiency pass‐on from the auditor to its clients depends on the audit firm's market power. We find that auditor office industry scale is associated with efficiency gains and a reduction of the variable costs (i.e., fewer total audit hours, partner hours, and staff hours), ceteris paribus. Our results also suggest that, on average, realized efficiencies are entirely passed on, as evidenced by a nonsignificant effect of auditor industry scale on the auditor's billing rate. Furthermore, we find that the extent of the efficiency pass‐on decreases with the market power of the audit firm in the industry market segment as we document a higher billing rate for auditors with high market power (versus low market power). In addition, we find that the lower audit hours associated with auditor industry scale do not compromise audit quality.     

An empirical test of spatial competition in the audit market

This study empirically examines the effects of competition through differentiation on audit pricing. Based on prior economic theory on differentiated-product markets (e.g., Hotelling, 1929, Tirole, 1988), we hypothesize that audit fees are affected by an auditor's relative location in a market segment. We define audit markets per industry segment and U.S. Metropolitan Statistical Area and specify an auditor's industry location relative to the client (auditor–client industry alignment) and relative to the closest competitor (industry market share distance to closest competitor). We find that audit fees increase in both auditor–client industry alignment and industry market share distance to the closest competitor.     

Supply chain relationships: Exploring the linkage between inter-organisational adaptation and learning

This paper aims to advance the process dimension of inter-organisational adaptation that takes places in supply chain relationships, building upon learning literature. Therefore, it summarizes and disentangles the different debates on inter-organisational adaptation and learning in the literature and establishes the theoretical linkage between both concepts. Two dyadic case studies show that the learning processes that underlie inter-organisational adaptations may be comprehensively classified based upon the direction of learning, resulting in “learning from” versus “learning with”, and based upon the span of learning, resulting in “incidental learning” versus “incremental learning”. The experiential nature of learning provides an explanation for the reinforcing character of inter-organisational adaptation, which is an alternative to the explanations presented in literature on supply chain relationships.     

Optimal migration policies: an analytical approach. Part I

This paper explores the analytical features of population distribution or human settlement policies. It proposes a methodology for quantitative policy analysis and policy design based on optimal control and system theory. The paper consists of two parts. This part shows how policy models may be derived from demographic and demoeconomic or demometric models by adding a new dimension: the goals-means relationship of population distribution policy. It examines a large class of relevant policy models and demonstrates their relationship to the original Tinbergen Theory of Policy, which provides a paradigm for static and dynamic policy analysis. Problems of existence and of design of optimal population distribution policies are studied analytically. In designing optimal policies, use may be made of the minimizing properties of generalized inverses.     

The effect of strategic and operating turnaround initiatives on audit reporting for distressed companies

Empirical research on the effect of turnaround initiatives on audit reporting is scant. This paper addresses this gap by examining audit reporting for distressed companies and its association with a broad array of strategic and operating turnaround initiatives. In particular, we study the association between business risk information and going-concern decisions for distressed clients. Using a sample of distressed firms in the US manufacturing industry, we find that both short-term cash flow potential as well as strategic growth and hence long-term cash flow potential are necessary for strategic turnaround initiatives to have a mitigating impact on the auditor’s going-concern decision. Strategic turnaround initiatives for which only one of these two conditions holds and operating turnaround initiatives appear to function as going-concern risk factors as they are associated with a higher likelihood that a going-concern opinion will be issued. We also find that specialist and non-specialist auditors assess the mitigating potential of some but not all turnaround initiatives differently. Overall, our results suggest that auditors’ strategic risk assessment (typically done in a business risk auditing context) is associated with the outcome of the audit process (the opinion).     

Consumers' willingness to buy products with environmental and ethical claims: the roles of social representations and social identity

This study investigates how social representations and consumers' identification with organic food consumers affects intentions to buy products that make environmental and ethical claims. For the purposes of the study, an online panel study was conducted on a representative sample of consumers (n = 1006) in the United Kingdom. The results demonstrate that consumers who are adherent to natural foods or technology and do not perceive food as a necessity are more willing to buy environmentally friendly and ethical products. There seems to be no relationship between perceptions of food as a source of enjoyment and intentions to buy sustainable products. Finally, social identification with the organic consumer is positively related with the intentions to buy products that make environmental and ethical claims. The current research demonstrates that both individual perceptions of food and consumers' perceptions of the social environment play an important role in promoting environmentally friendly and ethical behaviour.     

Bride Wealth and Household Security in Rural Zimbabwe

In this paper we ask why Zimbabwean households pay bride wealthin instalments rather than a lump sum on the date of marriage.We also pose the question why the type of cattle that has tobe paid is not exactly specified. Starting from the observationthat in rural Zimbabwe risk markets are absent we show thatflexibility in both timing and type of bride wealth paymentenhances household security beyond what is feasible throughincome pooling between relatives related through marriage. Theadditional security results from the creation of a large poolof means-conditional, enforceable claims on assets that arevital for income generation and consumption smoothing purposes.