Accounting Firms: Global Reach without Transnational Form

The market for auditing services is dominated by four accounting firms that operate worldwide: Deloitte & Touche (Deloitte), Ernst & Young (E&Y), KPMG and PriceWaterhouseCoopers (PwC). The so-called Big 4 offer auditing services, tax advisory and consulting. In 2011, each of the Big 4 was represented in at least 145 countries. Altogether the Big 4 employ more than half a million people and have realised a turnover of more than 100 billion USD in all three service lines. These numbers make them comparable with international corporations from other industries. However, the Big 4 accounting firms differ in three important ways from most global players. First, they belong to the group of professional service firms (Suddaby et al., 2009). Characterised by high knowledge intensity, low capital intensity and a professional workforce (Von Nordenflycht, 2010), their business model differs systematically from that of most other corporations. Second, they mainly use the corporate form of a professional partnership (Greenwood & Empson, 2003). Third, they entertain intense reciprocal relationships with their regulatory environments (Eberle & Lauter, 2011). This applies in particular to accounting and auditing standards.