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Audit Fees and Market Segmentation – Further Evidence on How Client Size Matters within the Context of Audit Fee Models
Author(s) -
Carson Elizabeth,
Fargher Neil,
Simon Daniel T.,
Taylor Mark H.
Publication year - 2004
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/j.1099-1123.2004.00159.x
Subject(s) - audit , business , accounting , context (archaeology) , joint audit , market segmentation , audit evidence , sample (material) , marketing , internal audit , geography , chemistry , archaeology , chromatography
The purpose of this paper is to examine the audit fee premium to the Big 6 brand in the small and large client segments of the market for audit services. We use a sample of Australian fee data for the five‐year period 1995 to 1999. We find evidence of price premiums to Big 6 auditors in the small client segment. We do not find evidence of fee premiums in the large client segment. We also present evidence that audit fees are not linearly related to client size as is typically assumed in audit fee models.