Audit Fees and Market Segmentation - Further Evidence on How Client Size Matters within the Context of Audit Fee Models

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 cl...

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Bibliographic Details
Published in:International journal of auditing 2004-03, Vol.8 (1), p.79-91
Main Authors: Carson, Elizabeth, Fargher, Neil, Simon, Daniel T., Taylor, Mark H.
Format: Article
Language:English
Subjects:
Accounting
Audit fees
audit market
Auditing
Audits
Business accounting
Finance
Financial reporting
Prices
Pricing
Professional fees
Studies
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Summary: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.
ISSN:1090-6738
1099-1123
DOI:10.1111/j.1099-1123.2004.00159.x