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Audit fee premiums of big eight firms: Evidence from the market for medium-size U.K. auditees


Che Ahmad, Ayoib and Houghton, Keith A. (1996) Audit fee premiums of big eight firms: Evidence from the market for medium-size U.K. auditees. Journal of International Accounting, Auditing and Taxation, 5 (1). pp. 53-72. ISSN 10619518

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Abstract

The modeling of fees within certain audit markets (notably, the United States and Australia) has assisted in understanding the factors that can explain the variability of audit fees. One important influence on fees is said to be the premiums charged by so-called “higher quality” or “first tier” (Big Eight or, more recently. Big Six) auditors. The present study examines this issue in one important, but much under-researched, market, that of the United Kingdom. Specifically, this study examines fee premiums paid (if any) by auditees which are not among the U.K. 's biggest companies but are firms that may be labeled as “medium-size.” Using a matched-pair sampling technique to overcome a potentially serious methodological problem relating to the underrepresentation of non-Big Eight audited companies, this study found no price premium for Big Eight auditors compared to other suppliers in this sector. This suggests an absence of fee premiums for such auditors. Consistent with much previous research, other influences on audit fees (including auditees' size, complexity, and risk) were all found to be significant, with auditor location being a less significant factor.

Item Type: Article
Subjects: H Social Sciences > HF Commerce > HF5601 Accounting
Divisions: College of Business
Depositing User: Prof. Dr. Ayoib Che Ahmad
Date Deposited: 15 Apr 2014 08:38
Last Modified: 15 Apr 2014 08:38
URI: http://repo.uum.edu.my/id/eprint/10357

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