Strategic pricing by B ig 4 audit firms in private client segments

We examine how B ig 4 auditors compete for new private clients. We find evidence suggesting that B ig 4 auditors offer fee discounts to attract non‐ B ig 4 private clients to experience attributes of their brand name audit services. We also find that to attract clients from competing B ig 4 suppliers, B ig 4 auditors target fee discounts at clients in industries where they are the market leader. Our results further indicate that the B ig 4 industry leaders target fee discounts to fast‐growing clients and are able to charge these clients significant price fee increases in the second mandate period (after 3 years).