The development of both brand name reputation and industry specializat
ion by Big 8 auditors is argued to be costly and therefore to increase
audit fees. For a sample of 1484 Australian publicly listed companies
we estimate audit fee premia for Big 8 auditors. On average, industry
specialist Big 8 auditors earn a 34% premium over nonspecialist Big 8
auditors, and the Big 8 brand name premium over non-Big 8 auditors av
erages around 30%. These results support that industry expertise is a
dimension of the demand for higher quality Big 8 audits and a basis fo
r within Big 8 product differentiation.