Audit Fees and the Large Auditor Premium in the Italian Market

The objective of this research is to highlight the determinants of audit fees in the Italian audit market. As described later, Italy is not directly comparable with other countries where these kinds of studies have been conducted. Furthermore, the Big Italian audit firms were condemned by the Italian Antitrust Authority for price fixing in 2000. A fee model for the Italian market is developed. Consistent with previous studies, findings show that the size, the complexity of auditee, and audit risk have an impact on the audit fee paid by Italian clients. Moreover, auditor size is also relevant. After performing further tests, it was found that large auditor premium could be attributed only to KPMG. So although the Italian Antitrust Authority condemned all the Big Six, the results support the idea that these auditors as a group did not accrue a general premium.