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

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  • Siddiqui, Javed
  • Zaman, Mahbub
  • Khan, Arifur

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.

Suggested Citation

  • Siddiqui, Javed & Zaman, Mahbub & Khan, Arifur, 2013. "Do Big-Four affiliates earn audit fee premiums in emerging markets?," Advances in accounting, Elsevier, vol. 29(2), pages 332-342.
    • Handle: RePEc:eee:advacc:v:29:y:2013:i:2:p:332-342
    DOI: 10.1016/j.adiac.2013.09.007
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    1. Kogilavani Apadore & Thanaletchumi R. Letchumanan, 2016. "Determinants of Audit Fees among Public Listed Companies in Malaysia. A Theoretical Model," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 6(2), pages 169-174, April.
    2. Khan, Arifur & Muttakin, Mohammad Badrul & Siddiqui, Javed, 2015. "Audit fees, auditor choice and stakeholder influence: Evidence from a family-firm dominated economy," The British Accounting Review, Elsevier, vol. 47(3), pages 304-320.
    3. Alhassan Musah, 2017. "Determinants of Audit fees in a Developing Economy: Evidence from Ghana," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 7(11), pages 716-730, November.
    4. Mohammad Rajon Meah & Kanon Kumar Sen & Md. Hossain Ali, 2021. "Audit Characteristics, Gender Diversity and Firm Performance: Evidence from a Developing Economy," Indian Journal of Corporate Governance, , vol. 14(1), pages 48-70, June.

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