The Type of Audit Firms Mergers in Iran: Formal or Real

Although increased mergers of audit firms in the Iranian audit market has attracted the attention of profession, regulatory bodies and researchers, little evidence is available on the motivations, barriers, processes, types, consequences and reasons for failures of audit firm’s mergers. Therefore, the present study is an attempt to open the black box of mergers of audit firms through in-depth interviews with the partners of these firms (23 interviews with the partners of involved audit firms in mergers) in order to better understands the type of the mergers (formal or real). Semi-structured questions cover different levels of post-merger integrations (physical, procedural and operational) in order to understand the type of audit firms’ merger. In general, insights from content analysis of interviews with partners of audit firms involved in the merger indicate that in most of the firms studied, procedural and operational (physical) integration has not (has) been occurred. Analysis of the interviews at the level of audit firms shows that most of the mergers made by the Iranian audit firms (eight cases) are formal and only two of the mergers are real and one is quasi-real. Our findings indicate that audit firms involved in merger continue to operate under a single name, but on the same pre-merger mechanisms without procedural and operational integrations.