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

Carson, Elizabeth; Fargher, Neil L.; Simon, Dan T.; Taylor, Mark H.

Purchase - $42.00

Add Paper to My Library

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

International Journal of Auditing, Vol. 8, No. 1, pp. 79-91, March 2004

13 Pages Posted: 28 Jun 2004

See all articles by Elizabeth Carson

Dan T. Simon

University of Notre Dame - Department of Accountancy

Mark H. Taylor

University of South Florida, Muma College of Business, Lynn Pippenger School of Accountancy

Abstract

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.

Keywords: Audit fees, audit market

JEL Classification: M49

Suggested Citation: Suggested Citation

Carson, Elizabeth and Fargher, Neil L. and Simon, Daniel T. and Taylor, Mark H., Audit Fees and Market Segmentation - Further Evidence on How Client Size Matters within the Context of Audit Fee Models. International Journal of Auditing, Vol. 8, No. 1, pp. 79-91, March 2004, Available at SSRN: https://ssrn.com/abstract=518771