The implications of merger for market share, audit pricing and non-audit fee income: the case of PricewaterhouseCoopers

Christopher Kam Man Pong, S. Burnett

    Research output: Contribution to journalArticlepeer-review

    22 Citations (Scopus)


    Purpose – Concern has been raised over the impact of the PricewaterhouseCoopers merger on the competitiveness of the market for audit services. This paper aims to examine the market share and audit pricing of PricewaterhouseCoopers in the UK before and after its merger. It also seeks to examine the change in consultancy services income of PricewaterhouseCoopers since its merger.

    Design/methodology/approach – Numerical data analysis is performed. In particular, concentration indices and audit fee model (OLS) are used.

    Findings – The increase in audit services market concentration as a result of the merger has not led to an increase in audit prices. Although the merger has enabled PricewaterhouseCoopers to increase its market leadership in regions and in industrial sectors, neither industry leadership nor city leadership generated a premium in audit pricing. An analysis of non-audit services fee income leads to the rejection of claims by critics that the main purpose of the merger is to enable PricewaterhouseCoopers to generate more non-audit services income from their audit clients. Its non-audit fee income has decreased since its merger.

    Research limitations/implications – Audit fee models used in the literature have not included the behavioural aspects of audit pricing, for example, client-auditor relationship. In addition, due to data availability, consultancy fee income of PricewaterhouseCoopers before the merger cannot be analysed.

    Originality/value – The research provides useful information for the accountancy profession and the regulators.
    Original languageEnglish
    Pages (from-to)7-22
    Number of pages16
    JournalManagerial Auditing Journal
    Issue number1
    Publication statusPublished - 2006


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