Big Four (Big 4)

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Introduction to the Big Four

The Big Four includes the four largest international professional services networks in accountancy and professional services. These professional services networks handle the wide majority of audits for publicly traded companies and various private companies thus creating an oligopoly in large companies’ auditing. This ‘Big Four’ group was once known as the ‘Big Eight’, and got reduced to the ‘Big Five’ through a series of mergers. The ‘Big Five’ further turned to ‘Big Four’ through further mergers.

Legal Structure

None of the Big Four accounting firms is an individual firm. They are all accounting networks, each one being a network of firms, held and managed independently and have entered into agreements with other firms existing in the network to share a common name, brand, and quality standards. Each network has set up an entity aimed at co-ordination of activities of the network. In one case (KPMG), Swiss is the co-coordinating entity, while in the remaining three (Deloitte Touche Tohmatsu, PwC and Ernst & Young), UK is the coordinating entity. These entities are not themselves involved in accountancy practice. Moreover, they also do not own or control the member firms. They are just like law firm networks instituted in the legal profession.

Mergers and the Big Auditors

For most of the 20th century, these firms were referred as the Big 8, replicating the international dominance of the eight largest accountancy firms:

  1. Arthur Andersen
  2. Arthur Young & Co.
  3. Coopers & Lybrand (until 1973 Cooper Brothers in the UK and Lybrand, Ross Bros., & Montgomery in the US)
  4. Ernst & Whinney (until 1979 Ernst & Ernst in the US and Whinney Murray in the UK)
  5. Deloitte Haskins & Sells (until 1978 Haskins & Sells in the US and Deloitte & Co. in the UK)
  6. Peat Marwick Mitchell (later Peat Marwick, then KPMG)
  7. Price Waterhouse
  8. Touche Ross

Through consequent mergers, these accounting firms got merged into the Big six, then the Big five, and consequently the Big four. The Big four is also sometimes referred to as the “Final Four” because of the widely held perception that competition regulators are not likely to allow further concentration of the accounting industry and that other companies would not be able to compete with the Big-4 for top-end work.

Currently, Big four includes:

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