Audit Firm Differentiation through Intellectual Property as a Means to Soften Price Competition

Marleen Willekens, Simon Dekeyser, Lars Van Cutsem and Victor S Zuiddam

No 742971, Working Papers Department of Accountancy, Finance and Insurance (AFI), Leuven from KU Leuven, Faculty of Economics and Business (FEB), Department of Accountancy, Finance and Insurance (AFI), Leuven

Abstract: This study examines whether audit firm differentiation signaled through the strength of its intellectual property (IP) portfolio softens price competition. Following the patent and trademark literature, we focus on the stock of these intellectual property rights as an indicator of audit firm differentiation capturing an audit firm’s brand strength and technological capabilities. We hypothesize that the audit fee charged by an audit firm is increasing in its IP portfolio strength, ceteris paribus. Employing data on intellectual property (IP) of U.S. audit firms, in terms of branding and technological capabilities, we identify all active trademarks and patents for the 50 largest U.S. audit firms between 2004 and 2022. Our results suggest that the strength of an audit firm’s portfolio of trademarks and patents is significantly positively associated with audit fees, suggesting that branding and technological capabilities are means for audit firms to soften price competition through IP differentiation.

Keywords: G074819N#54967485 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-acc, nep-com and nep-ipr
References: Add references at CitEc
Citations:

Downloads: (external link)
https://lirias.kuleuven.be/retrieve/763342 Accepted version (application/pdf)
KU Leuven intranet only, request a copy at https://lirias.kuleuven.be/handle/20.500.12942/742971

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ete:afiper:742971

Access Statistics for this paper

More papers in Working Papers Department of Accountancy, Finance and Insurance (AFI), Leuven from KU Leuven, Faculty of Economics and Business (FEB), Department of Accountancy, Finance and Insurance (AFI), Leuven
Bibliographic data for series maintained by library EBIB ().