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Audit prices, product differentiation and economic equilibrium
This study tests the hypothesis that Big 6 audit prices are higher than non-Big 6 audit prices for both large and small segments of the auditee market. The hypothesis is based on the assumption that these price differentials should be observed given product differentiation and competition in a stable audit market. The absence of price differentials between Big 6 and non-Big 6 auditors for large auditees due to diseconomies of scale to the non-Big 6 (previously non-Big 8) auditors found in some prior studies is inconsistent with long-run allocational efficiency which suggests that inefficient audit firms should be driven out of the market. Results of OLS regression analyses of Hong Kong market data provide evidence to support the above hypothesis that product differentiation and competition prevails in both segments of the market.
History
Journal
Auditing: a journal of practice & theoryVolume
18Issue
1Pagination
90 - 100Publisher
American Accounting AssociationLocation
[Lakewood Ranch, Fla]Publisher DOI
ISSN
0278-0380eISSN
1558-7991Language
engPublication classification
C Journal article; C1.1 Refereed article in a scholarly journalCopyright notice
1999, American Accounting AssociationUsage metrics
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