The Effect of Accounting Firm Mergers on the Market for Audit Services: New Zealand Evidence

18 Pages Posted: 8 May 2006  

Rachel F. Baskerville

Victoria University of Wellington - School of Accounting and Commercial Law

David Hay

University of Auckland - Business School

Abstract

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.

Suggested Citation

Baskerville, Rachel F. and Hay, David, The Effect of Accounting Firm Mergers on the Market for Audit Services: New Zealand Evidence. Abacus, Vol. 42, No. 1, pp. 87-104, March 2006. Available at SSRN: https://ssrn.com/abstract=891494 or http://dx.doi.org/10.1111/j.1467-6281.2006.00186.x

Rachel F. Baskerville (Contact Author)

Victoria University of Wellington - School of Accounting and Commercial Law ( email )

Faculty of Commerce and Administration
PO Box 600
Wellington
New Zealand
006444636951 (Phone)
006444635076 (Fax)

HOME PAGE: http://www.victoria.ac.nz/sacl/staff/rachel-baskerville.aspx

David Hay

University of Auckland - Business School ( email )

12 Grafton Rd
Auckland, 1010
New Zealand

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