The determinants of the UK Big Firms Premium

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The determinants of the UK Big Firms Premium

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dc.contributor.author McMeeking, Kevin P. en_GB
dc.contributor.author Pope, Peter F. en_GB
dc.contributor.author Peasnell, Ken V. en_GB
dc.contributor.department University of Exeter; Lancaster University en_GB
dc.date.accessioned 2008-04-15T10:57:00Z en_GB
dc.date.accessioned 2011-01-25T10:16:08Z en_US
dc.date.accessioned 2013-03-19T15:45:11Z
dc.date.issued 2006-09 en_GB
dc.description.abstract Our study attempts to determine whether, and if so why, the large auditing firms are able to earn a premium on their audit work in the UK. We start by confirming the apparent existence of a Big Firm premium during the period 1985-2002. We examine industry specialisation, non audit service fee and monopoly pricing explanations for the premium. The results of our tests of industry specialisation are mixed. There is little evidence that this premium is associated with industry specialisation when specialists are defined at the national level. Significant premium are observed if specialisation is defined at the city level, particularly if the auditor is the industry leader. However, when appropriate allowance is made for endogeneity, by modelling both audit and non-audit fees in a simultaneous equations framework, the Big Firm premium disappears. We find evidence to suggest that non audit fees earned by auditors from their audit clients are positively related to the size of the audit size and vice versa. Finally, when the sample is stratified by the size of audit client, we find no systematic evidence of anti-competitive pricing. en_GB
dc.identifier.citation Accounting and Business Research, 36, 3, 207-231 en_GB
dc.identifier.uri http://hdl.handle.net/10036/23394 en_GB
dc.language.iso en en_GB
dc.publisher Institute of Chartered Accountants in England and Wales en_GB
dc.relation.url http://www.abr-journal.co.uk/ en_GB
dc.relation.url The original publication is available at www.springerlink.com en_GB
dc.subject auditing en_GB
dc.subject non-audit fees en_GB
dc.subject Big Firm premium en_GB
dc.subject pricing en_GB
dc.title The determinants of the UK Big Firms Premium en_GB
dc.type Article en_GB
dc.date.available 2008-04-15T10:57:00Z en_GB
dc.date.available 2011-01-25T10:16:08Z en_US
dc.date.available 2013-03-19T15:45:11Z
dc.identifier.issn 0001-4788 en_GB
dc.identifier.journal Accounting and Business Research en_GB


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