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A descriptive analysis of audit price changes in the UK 1991-95

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  • Christopher Pong

Abstract

This paper examines changes in the audit fees of quoted public limited companies in the UK during the period from 1991 to 1995. After controlling for changes in the size, complexity and risk of auditees, it is shown (based on a logarithm audit fee model) that the audit market experienced a 9.7% reduction in inflation-adjusted fees over this five-year period. The results also provide evidence of overall fee reductions by each of the Big Six. On closer examination, a mixture of fee increases, decreases and no changes were observed for auditees of the Big Six and for the groups of medium-sized and small audit firms investigated. These results, which pertain to a period when market concentration increased markedly (Beattie and Fearnley, 1994; Peel, 1997; Pong, 1999), offer some amelioration of the concerns of the purchasers of audit services that, in general, audit fees will rise in response to an increase in dominance by a few large firms.

Suggested Citation

  • Christopher Pong, 2004. "A descriptive analysis of audit price changes in the UK 1991-95," European Accounting Review, Taylor & Francis Journals, vol. 13(1), pages 161-178.
    • Handle: RePEc:taf:euract:v:13:y:2004:i:1:p:161-178
    DOI: 10.1080/0963818032000134921
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    References listed on IDEAS

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    1. Palmrose, Zv, 1986. "The Effect Of Nonaudit Services On The Pricing Of Audit Services - Further Evidence," Journal of Accounting Research, Wiley Blackwell, vol. 24(2), pages 405-411.
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    5. Christopher K.M. Pong, 1999. "Auditor Concentration: A Replication and Extension for the UK Audit Market 1991–1995," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 26(3‐4), pages 451-475, April.
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    11. Ettredge, M & Greenberg, R, 1990. "Determinants Of Fee Cutting On Initial Audit Engagements," Journal of Accounting Research, Wiley Blackwell, vol. 28(1), pages 198-210.
    12. Tonge, Stanley D. & Wootton, Charles W., 1991. "Auditor concentration and competition among the large public accounting firms: Post-merger status and future implications," Journal of Accounting and Public Policy, Elsevier, vol. 10(2), pages 157-172.
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    1. Ruth O. Urhoghide Ph.D & Prof. F. O. I. Izedonmi, 2015. "An Empirical Investigation of Audit Fee Determinants in Nigeria," International Journal of Business and Social Research, MIR Center for Socio-Economic Research, vol. 5(8), pages 48-58, August.
    2. Ruth O. Urhoghide Ph.D & Prof. F. O. I. Izedonmi, 2015. "An Empirical Investigation of Audit Fee Determinants in Nigeria," International Journal of Business and Social Research, LAR Center Press, vol. 5(8), pages 48-58, August.

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