Do Big-Four affiliates earn audit fee premiums in emerging markets?

Javed Siddiqui, Mahbub Zaman, Arifur Khan

Research output: Contribution to journalArticlepeer-review

Abstract

The paper investigates whether Big-Four affiliated (B4A) firms earn audit premiums in an emerging economy context, using Bangladesh as a case. The joint determination of audit and non-audit service fees is also examined using a sample of 122 companies listed in the Dhaka Stock Exchange. Our findings reveal that although the B4A firms do not generally earn a fee premium in Bangladesh, they charge higher audit fees for clients not purchasing non-audit services. This suggests that the B4A firms may actually lower audit fees to attract non-audit services, and cross subsidizes audit fees through non-audit-services fees. The lack of a B4A premium implies that there is lack of quality audit in emerging markets. We also document that audit and non-audit service fees are jointly determined in Bangladesh. Thus, we provide evidence of joint determination of audit and non-audit service fees in an emerging economy context. © 2013 Elsevier Ltd.
Original languageEnglish
Pages (from-to)332-342
Number of pages10
JournalAdvances in Accounting
Volume29
Issue number2
DOIs
Publication statusPublished - Dec 2013

Keywords

  • Audit fees
  • Big-4 premium
  • Emerging markets
  • Non-audit fees

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