Andrew Ferguson
University of New South Wales
Abstract: This study examines whether evidence exists of anti-competitive pricing in the Australian audit market. The accounting profession has recently come under scrutiny from regulators, not only due to perceived independence issues, but also as a result of the reduction in competition amongst larger auditors. In Australia, the recent merger between Ernst & Young and Arthur Andersen, has reduced the number of top-tier competitors to 4. The issue is important in light of anecdotal assertions regarding the profitability of the Big 4, and frequent assertions that organizations such as the U.K. Office of Fair Trading, and the U.S. General Accounting Office are keeping a ‘watching brief’ on accountancy firms. Under section 701 of Sarbanes Oxley, the U.S. GAO is required to conduct an enquiry into consolidation in the audit market. However, although regulators easily recognize the potential for anti-competitive behavior, there is very little evidence addressing this concern.
Back to Program
