Strategic Pricing by Big 4 Audit Firms in Private Client Segments

34 Pages Posted: 28 Nov 2013

See all articles by Wouter Dutillieux

Wouter Dutillieux

KU Leuven - Faculty of Business and Economics (FEB)

Donald J. Stokes

Monash University

Marleen Willekens

Katholieke Universiteit Leuven (KUL)

Date Written: December 2013

Abstract

We examine how Big 4 auditors compete for new private clients. We find evidence suggesting that Big 4 auditors offer fee discounts to attract non‐Big 4 private clients to experience attributes of their brand name audit services. We also find that to attract clients from competing Big 4 suppliers, Big 4 auditors target fee discounts at clients in industries where they are the market leader. Our results further indicate that the Big 4 industry leaders target fee discounts to fast‐growing clients and are able to charge these clients significant price fee increases in the second mandate period (after 3 years).

Keywords: Big 4 competitive strategies, Client acquisition, Industry specialization, Fee discounts, Private clients

Suggested Citation

Dutillieux, Wouter and Stokes, Donald and Willekens, Marleen, Strategic Pricing by Big 4 Audit Firms in Private Client Segments (December 2013). Accounting & Finance, Vol. 53, Issue 4, pp. 961-994, 2013. Available at SSRN: https://ssrn.com/abstract=2360835 or http://dx.doi.org/10.1111/acfi.12051

Wouter Dutillieux (Contact Author)

KU Leuven - Faculty of Business and Economics (FEB) ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

Donald Stokes

Monash University ( email )

Department of Accounting and Finance
P O Box 197
Caulfield East, Victoria 3145
Australia

Marleen Willekens

Katholieke Universiteit Leuven (KUL) ( email )

Naamsestraat 69
B-3000 Leuven
Belgium

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