This paper examines the effects of audit firm mergers and the demise of Andersens on market concentration, competitiveness and audit pricing in the UK. Our results indicate that the large audit firms increased their market share between 1985 and 2002 by merging and expanding into new sectors....

Our study attempts to determine whether, and if so why, the large auditing firms are able to earn a premium on their audit work in the UK. We start by confirming the apparent existence of a Big Firm premium during the period 1985-2002. We examine industry specialisation, non audit service fee...