Audit fee premiums from brand name, industry specialization and industry leadership

A study of the post Big 6 merger in Malaysia

Mohd Mohid Rahmat, Takiah Mohd Iskandar

Research output: Contribution to journalReview article

5 Citations (Scopus)

Abstract

This study examines audit fee premiums from brand name, industry specialization, and industry leadership after the merger of two Big 6 audit firms, creating the Big 5 in 1998 in the Malaysian audit market. A sample of 679 companies listed at the main and second boards of Kuala Lumpur Stock Exchange (KLSE) are investigated for audit fee premiums. Industry specialization is determined on the basis of 20 per cent share of audit market calculated by the number of audited companies in the industry. Audit fee premiums are calculated based on the Simunic (1980) model of audit fees. Results show: that Big 5 audit firms obtain 65.4 per cent audit market share for all KLSE listed companies; that Big 5 audit firms earn higher audit fees than non-Big 5; and that industry specialization does not generate audit fee premiums. The study finds evidence for audit fee premiums derived from industry market leadership. Results also reflect the competitiveness among Big 5 audit firms in the audit market especially following the merger of Big 6 audit firms.

Original languageEnglish
Pages (from-to)1-24
Number of pages24
JournalAsian Review of Accounting
Volume12
Issue number2
DOIs
Publication statusPublished - 1 Feb 2004

Fingerprint

Industry specialization
Audit fees
Mergers
Industry
Premium
Brand names
Malaysia
Audit firms
Audit market
Listed companies
Stock exchange
Market share
Non-audit fees
Competitiveness

Keywords

  • audit fee premiums
  • Big 5
  • industry market leadership
  • Malaysia

ASJC Scopus subject areas

  • Accounting
  • Finance

Cite this

Audit fee premiums from brand name, industry specialization and industry leadership : A study of the post Big 6 merger in Malaysia. / Rahmat, Mohd Mohid; Mohd Iskandar, Takiah.

In: Asian Review of Accounting, Vol. 12, No. 2, 01.02.2004, p. 1-24.

Research output: Contribution to journalReview article

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