The 'Big Four': A restriction of choice?

Dr Kevin McMeeking, Senior Lecturer in Accounting at the School of Business and Economics has won a grant from the Institute of Chartered Accountants of Scotland to research competition, choice and governance in the UK Audit Market.

The research will investigate how different legal forms of ownership in accounting firms are perceived, the perceived need to reduce the gap between the Big Four accounting firms and the rest, and how recommendations proposed by the Market Participants Group are perceived by accounting firms, company chairmen, regulators, shareholders, analysts, banks and government.

After a series of mergers among leading accounting firms, and the collapse of Andersen, the UK audit market became highly concentrated in the hands of the Big Four accounting firms, which are Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers. Concerns have been raised that the high concentration levels and significant barriers to entry may restrict choice and price competition for auditing services. These concerns led to the creation of the Market Participants Group, which issued a report in 2007 containing 15 recommendations to improve choice and reduce the risks created by the market domination of the Big Four.

The research will provide a valuable insight into the current structure of the UK audit market, and the impact recent changes may have on choice, competition and governance. It is directed by the Institute of Chartered Accountants of Scotland, and the research will be undertaken by Dr Kevin McMeeking. The project will be completed in May 2008.

Date: 5 February 2008

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