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A udit S ervices and F ees of L arge A ccounting F irms
Author(s) -
Balachandran Bala V.,
Simon Daniel
Publication year - 1993
Publication title -
journal of economics and management strategy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.672
H-Index - 68
eISSN - 1530-9134
pISSN - 1058-6407
DOI - 10.1111/j.1430-9134.1993.00339.x
Subject(s) - audit , business , function (biology) , chemistry , food science , accounting , microbiology and biotechnology , biology
In the audit literature, it was postulated that audit firms are differentiated due to their quality and, thus, the fees charged are a function of quality. We hypothesize that this may lead to audit firm specialization in different amounts of auditing, leading to a differential audit fee structure. This hypothesis is empirically tested by using a very large sample of audit fees paid to then Big Eight auditors. The results are consistent with the hypothesis in that three Big Eight auditors are observed to charge significantly different fees when compared with the other firms.