'Asociacion Espanola de Contabilidad y Administracion de Empresas (AECA)'
Abstract
This study seeks to investigate the effect of market competition as a moderator factor of Big
Four fee premiums. Unlike previous studies, we measure market competition by structural
variables, such as market concentration or entry barriers, and dynamic variables of market
mobility, based on variations in the market shares of audit firms. Using a sample of Spanish
non-financial listed companies over the years 2003–2010, we find that Big Four premiums are
not explained by the level of competition within the market. Our findings are opposed to those
of academics and regulators who consider that Big Four auditors earn higher fees through the
exercise of market power. These results reinforce the idea that Big Four premiums are driven
by audit firms’ reputation as providers of quality-differentiated audit services