Meta-regression in auditing research: Evaluating the evidence on the Big N audit firm premium

The issue of whether the Big N audit firms charge higher fees is one of the most extensively researched areas in the auditing literature. This issue is also important to regulators. This paper applies a new technique-meta-regression analysis-to extract generalizable results from the research examining the premium charged by the Big N audit firms. The method first allows us to examine whether publication bias explains the inconsistent results of previous research on this issue. We are then able to examine contextual differences across studies that can explain when a Big N premium may or may not arise. The findings show that a statistically significant publication bias is present in research about the Big N audit firm premium, and the premium is somewhat overstated. Although this is a concern, the extent of publication bias is not so strong as to eliminate evidence of a remaining premium. Breaking down the publication bias shows evidence consistent with researchers with Big N audit firm affiliations being subject to greater publication bias, while researchers at more highly ranked business schools are subject to less. In terms of the context of the mixed results, we find that a positive premium is most likely to be observed in studies of the U.S. market and in the private sector.