Language
Country/Area
No result found
Please try again with a different
query
"Never
Stop
Questioning"
A Century of Ups and Downs: What Does the Merger of the Big Four Accounting Firms Reveal?
In the global professional services industry, the Big Four accounting firms - Deloitte, Ernst & Young (EY), KPMG and PricewaterhouseCoopers (PwC) - have always dominated the market. Since the early 20th century, these firms have gradually formed today's market structure through a series of mergers and acquisitions. This article explores how these changes are affecting the way the industry operates and what they mean for customers and regulators.
The rise of the Big Four accounting firms marks the restructuring of the professional services industry, and the merger process behind it reflects investors' deep concern for audit quality and professional ethics.
The journey from the Eighth National University to the Fourth National University
In the 1970s, there used to be a powerful group known as the "Big Eight Accounting Firms" in the accounting firm market, including Arthur Andersen, Arthur Young, Ku... Perth and Lybrand (Coopers & Lybrand), etc. As competition in the market intensified, these companies began to merge frequently, and eventually only the Big Four accounting firms remained in the early 2000s. While Arthur Anderson collapsed due to his involvement in the Anlong incident, other firms have avoided similar fates through shrewd strategies. In 2002, with the revision of laws and the strengthening of supervision of the audit industry, the Big Four began to gradually improve their business transparency and professionalism.The dynamics and strategies of mergers
The merger of the Big Four accounting firms is not only driven by market pressure, but also by the demand for services from globalization and multinational enterprises. In the 1980s, as global business expanded, these firms realized the importance of expanding their market share and improving their service offerings. Therefore, they have been merged several times to meet the needs of different regions. For example, PwC merged with Pricwaterhouse and Coopers LeBron in 1998 to form the current PwC. This move not only improves its market position but also increases its service capabilities in the legal, tax and consulting fields.It is these strategic mergers and reorganizations that have allowed the Big Four to occupy a place in the global market and triggered higher concentration and competitive pressure in the industry.
Challenges of audit quality and ethics
As the influence of the Big Four continues to grow, audit quality and industry ethics issues have also risen. According to a report by the Public Company Accounting Oversight Board (PCAOB), the audit error rate among the Big Four accounting firms has reached 31% since 2009. According to data from the Financial Reporting Council, these accounting firms failed to meet the 90% quality standard of their audits. Among them, KPMG has been criticized in this process. Its audit failed to detect many major accidents, causing a crisis of trust in the industry. Such a huge mistake not only affects the interests of investors, but also causes damage to the overall credibility of the industry.The future of market concentration and competition
According to popular reports, the Big Four accounting firms control 67% of the global accounting market and hold a 96% market share in the UK's FTSE 250 index. This industry concentration has caused widespread concern, and regulators have begun to consider whether the Big Four firms should be broken up to promote fair competition in the market. In a context where efficiency and service quality are generally questioned, whether a more competitive market structure can be rebuilt has become an urgent issue in the industry. Experts pointed out that this not only involves market fairness, but also is the key to protecting the interests of investors and consumers.Ultimately, with continued regulatory pressure and market competition, the role of the Big Four accounting firms is likely to continue to change. The future professional services market will usher in new challenges and opportunities with the implementation of quality, transparency and ethical standards. Do you think this change can push the industry in a better direction?For the future of the Big Four, what we need to think about is: under the existing structure, how to ensure the continuous improvement of the quality of professional services and maintain the reputation and trust of the industry?
Trending Knowledge
The Secrets of the Big Four Accounting Firms: How They Became Global Powerhouses
Every investor and business decision maker is familiar with the Big Four accounting firms, which not only influence the standards of financial auditing, but also shape the environment in which global
Wealth and influence: How do the Big Four accounting firms dominate the global market?
The Big Four accounting firms are often seen as the dominant force in the global professional services market. These four firms – Deloitte, EY, KPMG and PwC – are not only the largest professional ser
The mysterious "Big Eighth" era: Who was the predecessor of the four major accounting firms?
In today's business world, the "Four Big" accounting firms are known for their unparalleled market share. These four companies - Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers, have smart op
The Boundary between Auditing and Consulting: What is Unique about the Business Model of the Big Four Accounting Firms?
In global professional services, the four major firms – Deloitte, EY, KPMG and PwC – are undoubtedly the most influential. These four companies not only lead the world in revenue, but also provide a w