Determinants of industry expertise outsourced IAF: Do company and auditor attributes affect the selection?

Outsourcing the internal aud it function (IAF) is a worldwide practice attractive to companies, practitioners and regulators because believed that providers of this are objective competent can provide high-quality audit. This study explores potential influence company auditor characteristics on selecting outsourced IAF with industry expertise. Using 334 observations for non-financial companies an external provider over period 2010–2017, logistic regression suggests such as size, issue new equity, age, total accruals significantly determine selection industry-expertise (IEOIAF) providers. We report similar findings when considering alternative approaches measuring expertise, using matching sample method, controlling effect endogeneity. In additional analysis, we explore these determinants, classifying IEOIAF into big4 or second-tier audit firms; find leverage, quick ratio, concentrated ownership, loss, assets turnover, accruals, type, fees major determinants in choice provider. Our interest variety users provides first empirical evidence