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The Effect of the Big Eight Accounting Firm Mergers on the Market for Audit Services


  • Sullivan, M.W.


The research assesses how the two Big Eight mergers of 1989 affected the market for audit services. A data set of 1,978 firms over a 12-year period is used to test four theories of how the mergers could have affected competition and consumer welfare. The study finds that the mergers reduced the marginal costs of auditing large clients. There is no evidence that the mergers were anticompetitive or that they reduced costs for all types of audit buyers.

Suggested Citation

  • Sullivan, M.W., 2000. "The Effect of the Big Eight Accounting Firm Mergers on the Market for Audit Services," Papers 00-2, U.S. Department of Justice - Antitrust Division.
  • Handle: RePEc:fth:usjuat:00-2

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    References listed on IDEAS

    1. Farrell, Joseph & Shapiro, Carl, 1990. "Horizontal Mergers: An Equilibrium Analysis," American Economic Review, American Economic Association, vol. 80(1), pages 107-126, March.
    2. Werden, Gregory J, 1996. "A Robust Test for Consumer Welfare Enhancing Mergers among Sellers of Differentiated Products," Journal of Industrial Economics, Wiley Blackwell, vol. 44(4), pages 409-413, December.
    3. Perry, Martin K & Porter, Robert H, 1985. "Oligopoly and the Incentive for Horizontal Merger," American Economic Review, American Economic Association, vol. 75(1), pages 219-227, March.
    4. Werden, Gregory J, 1991. "Horizontal Mergers: Comment," American Economic Review, American Economic Association, vol. 81(4), pages 1002-1006, September.
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    More about this item



    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General


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