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This study investigates the Big 4 effect for a new-to-the-world audit service. Based on unique data from the Danish COVID-19 fixed cost support scheme we analyse differences in audit fees and two measures of audit quality across Big 4 and non-Big 4 engagements. Our findings suggest that firms engaging with Big 4 auditors experience more successful outcomes in the application process and are willing to pay a Big 4 premium for comparable assurance services. Clients of Big 4 auditors are, on average, more likely to receive full compensation, and experience fewer rejections during the application process than clients of non-Big 4 auditors. This research has implications for policymakers and companies.
Holm et al. (Wed,) studied this question.