Premium
What If There Were Three? Audit Pricing within the B ig 4 and the P ricewaterhouse C oopers' Premium in the A ustralian Audit Market
Author(s) -
Ferguson Andrew,
Scott Tom
Publication year - 2014
Publication title -
international journal of auditing
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.583
H-Index - 21
eISSN - 1099-1123
pISSN - 1090-6738
DOI - 10.1111/ijau.12011
Subject(s) - audit , business , dominance (genetics) , pricing strategies , competition (biology) , accounting , market share , finance , marketing , biology , gene , ecology , biochemistry , chemistry
This paper examines intra‐ B ig 4 audit fee premiums in the A ustralian market. During the period examined (2002–2004), there is both B ig 4 and intra‐ B ig 4 market dominance. The three largest firms – the ‘ B ig 3’ (Ernst & Young, KPMG and PricewaterhouseCoopers) – hold over 80 per cent of audit fees for companies listed on the A ustralian S ecurities E xchange. We find the main feature of the A ustralian audit market over this period is a P w C brand premium, which suggests price competition and thus no collusive pricing. Within the B ig 4, audit pricing effects are likely to be a growing area of inquiry in future audit pricing literature. Overall, our study implies that regulatory concerns about a lack of a competition in the audit market during this period are inconsistent with the audit pricing evidence.