The Competitive Pricing of Audit Services in a Non-Big 4 Market

This study examines audit pricing in a market characterized by increasing competition for the supply of audit services but without the presence of large international audit firms. Using traditional audit fee modeling, we find that, in the absence of international brand names, audit firm size or market power remains associated with audit fee premia. We also find that increased competition in the supply side of audit services following regulatory changes resulted in changes in the audit fee determinants and provides evidence supportive of increased price competition. These results have implications for the consequences of increasing the number of audit firms. This study extends the audit fee literature by examining how increased competition in the audit market affects the pricing of audit services in emerging markets.