The Effect of Accounting Firm Mergers on the Market for Audit Services: New Zealand Evidence
Rachel F. Baskerville
Victoria University of Wellington - School of Accounting and Commercial Law
University of Auckland - Department of Accounting and Finance
Abacus, Vol. 42, No. 1, pp. 87-104, March 2006
This article examines the outcomes of accounting firm mergers using data about the frequency of audit switches, the numbers of partners in the respective firms, and perceptions revealed in interviews with partners. Evidence from client switches does not show any evidence that the mergers were followed by cost reductions, or of collusion to force prices up. The effects of the mergers appear to have been elsewhere - the merging firms reduced partner numbers substantially, increasing partner leverage so that individual remaining partners were better off. Data from interviews confirm these findings, and show that the culture of individual firms had a significant effect on determining which group of partners controlled the merged firm.
Number of Pages in PDF File: 18Accepted Paper Series
Date posted: May 8, 2006
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