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Competition and Big 6 Brand Name Reputation: Evidence from the Ontario Municipal Audit Market

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  • SATI P. BANDYOPADHYAY
  • JENNIFER L. KAO

Abstract

The 1991 amendment to the auditor appointment requirement of section 86 of the Ontario Municipal Act removes certain barriers to entry into the Ontario municipal audit market. The purpose of this study is to provide evidence that the amendment has enhanced competition in this market. The results indicate that there is a general reduction in the real municipal audit fees compared with the pre†amendment levels, and that the market has become more contestable following the amendment. Notwithstanding the heightened competition, the Big 6 audit firms continue to command audit fee premiums over the non†Big 6 audit firms. This suggests that Big 6 audit fee premiums possibly reflect brand name reputation rather than monopoly/oligopoly rents.

Suggested Citation

  • Sati P. Bandyopadhyay & Jennifer L. Kao, 2001. "Competition and Big 6 Brand Name Reputation: Evidence from the Ontario Municipal Audit Market," Contemporary Accounting Research, John Wiley & Sons, vol. 18(1), pages 27-64, March.
    • Handle: RePEc:wly:coacre:v:18:y:2001:i:1:p:27-64
    DOI: 10.1506/JWFM-24F5-2KQG-AV37
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    Cited by:

    1. Ananda R. Ganguly & Joshua Herbold & Mark E. Peecher, 2007. "Assurer Reputation for Competence in a Multiservice Context," Contemporary Accounting Research, John Wiley & Sons, vol. 24(1), pages 133-170, March.
    2. Ballantine, Joan & Forker, John & Greenwood, Margaret, 2008. "Public and private sector auditors and accruals quality in English NHS hospital Trusts," The British Accounting Review, Elsevier, vol. 40(1), pages 28-47.
    3. Ho, Nam, 2023. "Local competition and auditors' provision of non-audit services," Advances in accounting, Elsevier, vol. 63(C).
    4. Lin, Z. Jun & Liu, Ming, 2009. "The impact of corporate governance on auditor choice: Evidence from China," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 18(1), pages 44-59.
    5. Kar‐Ming Chong & Colin Dolley & Keith Houghton & Gary S. Monroe, 2009. "Effect of outsourcing public sector audits on cost‐efficiency," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 49(4), pages 675-695, December.
    6. Kevan Jensen, 2005. "A basic study of agency-cost source and municipal use of internal versus external control," Accounting and Business Research, Taylor & Francis Journals, vol. 35(1), pages 53-67.
    7. Chen, Charles J.P. & Su, Xijia & Wu, Xi, 2007. "Market competitiveness and Big 5 pricing: Evidence from China's binary market," The International Journal of Accounting, Elsevier, vol. 42(1), pages 1-24.
    8. DeFond, Mark & Zhang, Jieying, 2014. "A review of archival auditing research," Journal of Accounting and Economics, Elsevier, vol. 58(2), pages 275-326.
    9. Cahan, Steven & Hay, David & Li, Lina Z., 2021. "Audit firm merger and the strategic response by large audit firms," The British Accounting Review, Elsevier, vol. 53(3).

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