Journal articles: 'Audit market concentration'

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Barghathi, Yasser, Esinath Ndiweni, and Alhashmi Aboubaker Lasyoud. "Joint audit, audit market concentration, and audit quality: Perceptions of stakeholders in the UAE." Corporate Ownership and Control 17, no. 2 (2020): 32–45. http://dx.doi.org/10.22495/cocv17i2art3.

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The present study is intended to scholarly explore auditors’ perceptions regarding joint audits; whether it can improve audit quality. To reach this goal, participants were enrolled from Big 4, non-Big 4, and other stockholders. In addition, the present study examines the perception of the same stakeholders in terms of how audit concentration affects the audit market in the UAE. Being a qualitative study, 12 semi-structured interviews were conducted to collect required data; 4 face to face and 8 through using Google forms. The finding of the study revealed mixed perception regarding joint audits; it may improve audit quality at the cost of high fees and free-rider problems. Findings of the study has practical implication for policymakers of emerging economies around the globe, such as policymakers who can make joint audits as compulsory. Another significance of the present work is that it has allowed for the perception of stakeholders, who are at the center of the controversial subject of joint audits and audit market concentration. The study suggests that there is a need for removing language barriers; it will benefit some firms in the form of directly communicating with auditors either in English or in Urdu.

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Eshleman, John Daniel, and Bradley P. Lawson. "Audit Market Structure and Audit Pricing." Accounting Horizons 31, no. 1 (September 1, 2016): 57–81. http://dx.doi.org/10.2308/acch-51603.

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SYNOPSIS Extant literature finds mixed evidence on the association between audit market concentration and audit fees. We re-examine this issue using a large sample of U.S. audit clients covering 90 metropolitan statistical areas (MSAs) spanning 2000–2013. We find that audit market concentration is associated with significantly higher audit fees, consistent with the concerns of regulators and managers. We also find that increases in audit market concentration are associated with fewer initial engagement fee discounts (i.e., reduced lowballing), particularly for non-Big 4 clients. We reconcile our findings with those of prior research and find that our divergent findings are attributable to controls for MSA fixed effects. In supplemental analyses, we find that audit market concentration is associated with higher audit quality. We also find that concentration is associated with higher audit quality for first-year engagements, but only if the auditor does not lowball on the engagement. Our results are relevant to the ongoing debate regarding the consequences of increased concentration within the U.S. audit market (GAO 2003, 2008). JEL Classifications: M41; M42; L13.

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Kermiche, Lamya, and Charles Piot. "The Audit Market Dynamics in a Mandatory Joint Audit Setting: The French Experience." Journal of Accounting, Auditing & Finance 33, no. 4 (December 27, 2016): 463–84. http://dx.doi.org/10.1177/0148558x16680716.

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Policy makers in France have considered joint audits as a solution to mitigate the audit market concentration and the “systemic” risk associated with Big 4 auditors. We implement a Markovian analysis where audit clients chose between different types of combinations across Big 4 and smaller auditors. Our main findings support the view that the French joint audit system is effective in maintaining market openness and in mitigating the Big 4 domination in the long run. An investigation of the determinants driving changes in joint audit combinations suggests little economic support in favor of two Big 4 combinations, whereas changes in audit clients’ agency costs (e.g., higher ownership concentration) tend to explain the performance of mixed and two non-Big 4 combinations. Overall, this study supports the European Commission’s position on the potential benefits of joint audits in mitigating the market concentration; it also suggests that it might not be necessary to impose mixed joint audits to achieve that objective.

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Bleibtreu, Christopher, and Ulrike Stefani. "Auditing, consulting, and audit market concentration." Zeitschrift für Betriebswirtschaft 82, S5 (September 2012): 41–70. http://dx.doi.org/10.1007/s11573-012-0597-5.

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Huang, Ting-Chiao, Hsihui Chang, and Jeng-Ren Chiou. "Audit Market Concentration, Audit Fees, and Audit Quality: Evidence from China." AUDITING: A Journal of Practice & Theory 35, no. 2 (September 1, 2015): 121–45. http://dx.doi.org/10.2308/ajpt-51299.

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SUMMARY We investigate the effects of audit market concentration on audit fees and audit quality in China, where competition is intense and the legal environment is relatively weak compared with developed countries. Analyzing 12,334 firm-year observations for the period 2001 to 2011, we find a significant positive relation between concentration and audit fees. Path analysis shows that concentration improves client earnings quality and reduces the need for auditors to issue modified audit opinions through increased audit fees. Additional analysis indicates that the increased audit fees and client earnings quality resulting from increased concentration are associated with a lower likelihood of executives and auditors being sanctioned by regulators for audit failures. Together, our results suggest that concentration improves audit quality indirectly through increased audit fees and this positive indirect effect offsets the negative direct effect of concentration on audit quality. By separating the direct and the indirect effect of concentration on audit quality, our study would explain why previous studies that do not have a separation document mixed evidence. Our findings inform regulators that actions taken to eliminate the indirect effect of concentration, for example restricting the upper bound of audit fees, could produce unintended outcomes such as decreased audit quality.

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Bleibtreu, Christopher, and Ulrike Stefani. "The Effects of Mandatory Audit Firm Rotation on Client Importance and Audit Industry Concentration." Accounting Review 93, no. 1 (April 1, 2017): 1–27. http://dx.doi.org/10.2308/accr-51728.

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ABSTRACT Recently, a system of audit firm rotation has been implemented for the audits of listed companies conducted in the European Union (EU). In the U.S., in contrast, the regulator decided against such rotation. Whereas proponents argue that rotation would strengthen independence and decrease audit market concentration, opponents stress the importance of auditors' learning effects, which would be eliminated by a change in auditors. In extending the market matching model of Salop (1979), we provide an analysis that integrates these contradictory views. We assume that both auditors' industry expertise and their experience in auditing a client decrease audit costs. We investigate the bidding strategies applied to re-acquire clients that were lost due to rotation, auditors' profit contributions, the equilibrium number of auditors (i.e., audit market concentration), and the economic importance of specific clients. Our findings indicate that the regulators' goals of simultaneously decreasing client importance and audit market concentration are in direct conflict and, therefore, the rotation system might have unintended consequences. Our model, thus, suggests how different institutional parameters give rise to economic forces that can support diverging decisions regarding the implementation of MAR.

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Indyk, Magdalena. "Mandatory audit rotation and audit market concentration – evidence from Poland." Economics and Business Review 5, no. 4 (2019): 90–111. http://dx.doi.org/10.18559/ebr.2019.4.5.

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Ishak, Aniza @. Marzita, Nooriha Mansor, and Enny Nurdin Sutan Maruhun. "Audit Market Concentration and Auditor's Industry Specialization." Procedia - Social and Behavioral Sciences 91 (October 2013): 48–56. http://dx.doi.org/10.1016/j.sbspro.2013.08.400.

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Cabán-García, María T., and Susan E. Cammack. "Industry and City-Level Audit Market Concentration." International Journal of Auditing 15, no. 1 (October 15, 2010): 21–42. http://dx.doi.org/10.1111/j.1099-1123.2010.00421.x.

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Rodriguez Castro, Paula Isabel, Emiliano Ruiz Barbadillo, and Estíbaliz Biedma López. "Market power and audit market collusion: the Spanish case." Academia Revista Latinoamericana de Administración 30, no. 3 (August 7, 2017): 344–61. http://dx.doi.org/10.1108/arla-11-2015-0307.

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Purpose The purpose of this paper is to analyse whether the major international audit firms reach collusive agreements in Spain, in order to exercise market power and impose higher prices than those of competitors. According to the traditional theory of oligopoly, the ability to achieve these agreements is dependent primarily on the high level of market concentration, so that multiple studies have analysed the relationship between concentration and prices. However, the concentration has serious limitations to infer collusion and therefore the exercise of market power (Dedman and Lennox, 2009). Design/methodology/approach Based on an alternative current of the theory of industrial organisation, the authors use measures of industrial mobility as a measure of collusion or rivalry of firms in oligopolistic markets. Findings The results reveal that international audit firms do not reach collusive agreements to limit competition between them. Social implications According to the empirical evidence obtained, the measures taken by the regulatory bodies to avoid market concentration would not be necessary or efficient and they would have significant costs for the audit market (GAO, 2003, 2008; FRC, 2009; European Commission, 2010; Competition Commission, 2013). Originality/value To the authors’ knowledge, this is the first study to introduce mobility measures to explain market collusion and the exercise of market power in the audit market.

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Mijić, Kristina, Dejan Jakšić, and Bojana Vuković. "Concentration of the Audit Market: Evidence from Serbia." Economic Themes 52, no. 1 (March 13, 2015): 115–26. http://dx.doi.org/10.1515/ethemes-2014-0008.

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Abstract This paper presents a research on market concentration of audit services in the Republic of Serbia during the 2008-2011 period. Market concentration was measured by Herfindahl-Hirschman index (HHI) and concentration ratio CR4, based on four independent variables: operating revenue, net earnings, number of employees and number of audit clients. The research of market concentration based on operating revenue as the most referential variable indicated that the market for audit services in the Republic of Serbia has a moderate concentration and that it has the characteristics of an oligopoly of four largest audit firms known as “Big Four”. However, research of market concentration, when other variables are taken in consideration, does not reveal dominance of “Big Four” in terms of net earnings, number of employees and number of clients. The differences in conclusions when different variables are concerned can be explained by relatively high audit fees of “Big Four” and a lack of correlation between operating revenue and net earnings.

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Makarenko, Inna, and Oleksiy Plastun. "Quasi-Competitiveness of the Audit Services Market in Ukraine: The Aspect of European Integration." Visnyk of the National Bank of Ukraine, no. 237 (September 29, 2016): 20–26. http://dx.doi.org/10.26531/vnbu2016.237.027.

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In the context of European integration processes and transformations in the banking sector, a study of the concentration of the audit services market in Ukraine, one of the most regulated markets, was held. The authors applied a number of methods for evaluation of concentration: the traditional methods of determining the level of market competition and the Kruskal-Wallis test to confirm market heterogeneity. The results allow for a conclusion that there is a high level of regional market concentration, which necessitates a competitive market environment for the implementation of audit services.

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Bandyopadhyay, Sati P., Changling Chen, and Yingmin Yu. "Mandatory audit partner rotation, audit market concentration, and audit quality: Evidence from China." Advances in Accounting 30, no. 1 (June 2014): 18–31. http://dx.doi.org/10.1016/j.adiac.2013.12.001.

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Song, Bomi, Juryum Chung, and Geum-Joo Jhang. "Audit Market Concentration and Auditor Change: The Effect on Audit Fees." Korean Accounting Journal 29, no. 2 (April 30, 2020): 87–119. http://dx.doi.org/10.24056/kaj.2020.03.001.

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Bigus, Jochen, and Ruth-Caroline Zimmermann. "Non-Audit Fees, Market Leaders and Concentration in the German Audit Market: A Descriptive Analysis." International Journal of Auditing 12, no. 3 (October 31, 2008): 159–79. http://dx.doi.org/10.1111/j.1099-1123.2008.00378.x.

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Wang, Chen-Chin, Fan-Hua Kung, and Kai-Hsun Lin. "Does audit firm size contribute to audit quality? Evidence from two emerging markets." Corporate Ownership and Control 11, no. 2 (2014): 108–19. http://dx.doi.org/10.22495/cocv11i2p8.

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This study investigated whether the Big N audit firms in emerging markets can provide audits of high quality and mitigate information risk, by comparing the audit quality of Big N audit firms in Taiwan with those in China. The two countries share a similar cultural background and engage in frequent economic exchange; however, they have different legal systems and institutional environments. This study followed previous research in the use of bid-ask spread and discretionary accruals as proxy variables for information asymmetry and audit quality. Our results indicate that politico-economic differences between Taiwan and China influence the effectiveness of independent auditors when it comes to the mitigation of information asymmetry. Big N audit firms in Taiwan helped to mitigate information asymmetry and provided audit services of higher quality, whereas Big N firms in China were better able to constrain earnings management. Our results indicate that market concentration and market share have a stronger influence on reputation incentive and audit quality than does the size of an audit firm.

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Mynhardt, Ronald H., Alex Plastun, and Inna Makarenko. "Competitiveness of the Ukrainian audit market." Risk Governance and Control: Financial Markets and Institutions 7, no. 2 (2017): 177–93. http://dx.doi.org/10.22495/rgcv7i2c1p6.

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Ukrainian association with EU forces the implementation of some EU Directives and Regulation acts in Ukrainian audit market. One of the key issues for compliance with the EU principles is the presence of competition in the market. This paper provides new empirical evidence on the concentration in Ukrainian audit market. The use of different methods to measure market competitiveness: (i) traditional measurements of market competition (Hirschman Index, Lerner Index, Comprehensive concentration index, Entropy Index etc.) to examine market concentration; (ii) a multivariate regression analysis with dummy variables and Kruskal-Wallis test to confirm the hypothesis about market heterogeneity; allows to show that Ukrainian audit market has quasi-competitive character and is characterized by a high level of regional market concentration. To stimulate competition some policy implications are proposed in this paper. Among them are: cancellation of restrictive covenants for some market participants, promotion of integrity tendering practices in attracting auditors to perform tasks on the principles of transparency and openness; increasing the effectiveness of the Antimonopoly Committee of Ukraine regulatory activities in audit sphere; development of local audit practice.

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Song, Bomi. "The Effect of Audit Market Concentration on Audit Quality : Focused on Audit Committee Expertise." Accounting Information Review 38, no. 1 (March 31, 2020): 47–73. http://dx.doi.org/10.29189/kaiaair.38.1.03.

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Gunn, Joshua L., Brett S. Kawada, and Paul N. Michas. "Audit market concentration, audit fees, and audit quality: A cross-country analysis of complex audit clients." Journal of Accounting and Public Policy 38, no. 6 (November 2019): 106693. http://dx.doi.org/10.1016/j.jaccpubpol.2019.106693.

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Duh, Rong-Ruey, Chunlai Ye, and Lin-Hui Yu. "Corruption and audit market concentration: an international investigation." Asia-Pacific Journal of Accounting & Economics 27, no. 3 (October 29, 2018): 261–79. http://dx.doi.org/10.1080/16081625.2018.1540942.

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Yang, Yi-Fang, and Yahn-Shir Chen. "Quality moderates market competition: evidence of Taiwanese service industry." International Journal of Quality & Reliability Management 33, no. 9 (October 3, 2016): 1332–45. http://dx.doi.org/10.1108/ijqrm-08-2013-0133.

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Purpose The purpose of this paper is to examine the direct and interactive effects of audit service quality and audit market concentration on performance of public accounting firms in Taiwan. Design/methodology/approach Empirical data of this study come from registered public accounting firms in Taiwan, an industrial data. From the perspective of industrial economics and based on the structure-conduct-performance paradigm (Cowling and Waterson, 1976), this study use OLS to test the linear regression equation. Findings Empirical results indicate that both audit service quality and audit market concentration have positive effects on performance. The interaction terms between audit service quality and audit market concentration are positively related to performance. Practical implications This documents that human capital is the core resource in public accounting firms which could enhance performance through higher audit service quality under intense market competition. Specifically, facing increasingly competitive audit market, public accounting firms response to the hostile situation by employing auditors with higher educational level, more work experience, with professional licenses, and taking more continuing professional education. Originality/value Few previous researches consider the effects of either market concentration or audit service quality on firm performance. This study simultaneously examines the relation among audit service quality, audit market concentration, and performance of public accounting firms. With the results, this study contributes knowledge to human resource and quality management-related literatures.

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Gad, Jacek. "The market for audit services provided to public companies listed on the Polish capital market." Zeszyty Teoretyczne Rachunkowości 2018, no. 97 (153) (May 10, 2018): 9–30. http://dx.doi.org/10.5604/01.3001.0012.0353.

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The aim of the article is to identify changes in the concentration on the market for audit services provided to public companies listed on the Warsaw Stock Exchange. The additional aim is to identify changes in the level of rotation among firms providing audit services to public companies listed on the Warsaw Stock Exchange. The research conclusions were based on the analysis of 2 652 annual reports prepared in the years 2011-2016 by companies listed on the Warsaw Stock Exchange. Reports came from the websites of the surveyed companies. The data was collected manually. It was found that in the years 2011–2016 the concentration in the market for audit services provided to public companies increased. Six audit firms, referred to in the article as “leading” firms, provided their services to over half of public companies. Their share in the audit services market varied across sectors. The level of rotation of audit firms providing their services to public companies in particular sectors was also different. It should be pointed out that the level of concentration in the market for audit services provided to public companies in Poland is lower than the average level of concentration for all EU countries. In Poland, in 2015, the CR4 indicator was around 41%, while the average value of this indicator for the EU countries was around 70%. So far, there has been no comprehensive analysis of the Polish audit services market in the relevant literature. This article seeks to fill a research gap in this respect.

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Sukhonos, Victor, Yulia Serpeninova, Serhiy Makarenko, Viktoriia Levkulych, and Galina M. Kolisnyk. "Audit of banks as public interest entities: Segmentation and conjuncture of the bank audit market in Ukraine." Banks and Bank Systems 16, no. 1 (March 23, 2021): 138–51. http://dx.doi.org/10.21511/bbs.16(1).2021.13.

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An important factor in restoring the confidence of financial consumers in banks is to provide auditors with credible and detailed financial statements and their solvency. This study is a pilot step in clarifying the auditor’s role in ensuring the banks’ reliability as public interest entities in Ukraine. It is aimed at investigating the segmentation of the banking audit services market in Ukraine and its comprehensive characteristics. Structural and dynamic analysis were applied to investigate market, regional and branch concentration, as well as main trends in bank audit market development within the data and registers of the Audit Chamber of Ukraine (ACU) and 75 annual reports of Ukrainian banks. Key aspects of the bank audit market in Ukraine are highlighted: the potential of the bank audit market, the ability of auditors to provide audit services and current characteristics of market conjuncture. Bank audit market is highly segmented: this study differentiates strong segments of international audit networks, associations and alliances, including Big 4 companies and the segment of weak Ukrainian audit companies. Kyiv and Kyiv region are the dominant economic active regions in terms of the regional bank market concentration and the presence of international audit networks. The study results are the basis for improving the regulation of the banking audit services market by the National Bank of Ukraine and ACU.

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Zhukova, T., I. Hanus, and I. Plikus. "AUDIT SERVICE MARKET ANALYSIS IN UKRAINE." Vìsnik Sumsʹkogo deržavnogo unìversitetu, no. 2 (2019): 63–69. http://dx.doi.org/10.21272/1817-9215.2019.2-8.

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The analysis of the audit services market clearly demonstrates a significant fluctuation in the quantity and cost of services in different regions, which in most cases depends on the concentration of industrial enterprises, the solvency of the audit customers themselves and their understanding of the cost and quality of audit services. This article is dedicated to this, in which such fundamental issues of the activities of audit firms and auditors as entering the professional services market, the quality of such services, and pricing for audit services are examined. The analysis of the audit services market clearly demonstrates a significant fluctuation in the quantity and cost of services in different regions, which in most cases depends on the concentration of industrial enterprises, the solvency of the audit customers themselves and their understanding the cost and quality of audit services. The article considers such problems of the auditors and audit firms activities as entering the professional services market, the quality of such services, and pricing of audit services. The analysis of the market of audit services is presented, which demonstrates a significant fluctuation in the quantity and cost of services in different regions, which in most cases depends on the solvency of audit customers, the concentration of industrial enterprises and the quality of audit services provided. The analysis of the audit activities results and the state of the market for audit services indicates that the audit market suffers from changes occurring in the country, which indicate that the audit market is functioning and transforming as a result of a number of factors, in particular: crisis phenomena in society; stricter requirements for the audit profession by regulators; imperfection of the legislative framework; lack of a mechanism for pricing audit services; lack of punishment for false information in the reports of auditors; insufficient number of highly qualified auditors; decrease in solvency of audit customersю It was found that, along with a decrease in the number of subjects of audit activity in the Register of Audit Firms, there is a tendency to increase the volume of services provided. It is proved that in order to increase the value of the audit, introduce and operate a system for ensuring the quality of audit services, improve the professional knowledge of practicing accountants, increase the market for audit services and ensure the important role of the audit profession recognized in our society, constant monitoring and development of decisions on issues related to the functioning of the audit system in Ukraine are necessary. Keywords: audit, market, competition, audit quality, cost of audit services, subjects of audit activity

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Chang, Hsihui, Yingwen Guo, and Phyllis Lai Lan Mo. "Market Competition, Audit Fee Stickiness, and Audit Quality: Evidence from China." AUDITING: A Journal of Practice & Theory 38, no. 2 (June 1, 2018): 79–99. http://dx.doi.org/10.2308/ajpt-52173.

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SUMMARY This study examines how audit fee stickiness varies with changes in market competition in China and its effect on audit quality. The Chinese audit market structure has changed significantly since the Chinese Institute of Certified Public Accountants (CICPA) issued a proposal to enhance the competitiveness of large domestic audit firms by promoting the consolidation of domestic audit firms in 2007. Using a sample of Chinese listed firms, we find a decrease in upward stickiness and an increase in downward stickiness as market concentration increases in the post-Proposal period. The asymmetry between upward and downward fee stickiness is greater in local markets that are more dominated by the top 10 domestic auditors. Moreover, we find that upward (downward) fee stickiness has a negative (positive) association with audit quality as measured by earnings management and auditor reporting conservatism. JEL Classifications: D40; M42.

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Quick, Reiner, and Matthias Wolz. "Concentration on the German Audit Market - An Empirical Analysis of the Concentration on the German Market for Stock Corporation Audits." International Journal of Auditing 3, no. 3 (November 1999): 175–89. http://dx.doi.org/10.1111/1099-1123.00058.

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Quick, Reiner, and Matthias Wolz. "Concentration on the German audit market—an empirical analysis of the concentration on the German market for stock corporation audits." International Journal of Auditing 3, no. 3 (November 1999): 175–89. http://dx.doi.org/10.1002/(sici)1099-1123(199911)3:3<175::aid-ija55>3.0.co;2-e.

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Richardson, Alan J. "THE CANADIAN AUDIT MARKET IN THE FIRST HALF OF THE TWENTIETH CENTURY." Accounting Historians Journal 28, no. 2 (December 1, 2001): 110–39. http://dx.doi.org/10.2308/0148-4184.28.2.110.

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This paper explores the structure of the Canadian audit market between 1901 and 1941 based on a sample of 3661 financial statements from 956 firms. Two aspects of the market are examined: first, the overall degree of market concentration, and second, the existence of market segmentation. In addition, a specific concern of the paper is to analyse competition between domestic accounting firms and the international accounting firms leading to the merger of major independent Canadian firms with international accounting firm networks after World War Two. The data show a pattern of increasing concentration during the period among a small set of domestic and international firms. The data identify both a national market and a series of regional markets for audit services. There is also evidence of market segmentation by industry and stock exchange listing. Overall, the evidence suggests that the early Canadian audit market was competitive but fragmented into a series of niche markets. Domestic firms were able to compete with the international firms but the market was becoming increasingly concentrated.

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Newton, Nathan J., Dechun Wang, and Michael S. Wilkins. "Does a Lack of Choice Lead to Lower Quality? Evidence from Auditor Competition and Client Restatements." AUDITING: A Journal of Practice & Theory 32, no. 3 (March 1, 2013): 31–67. http://dx.doi.org/10.2308/ajpt-50461.

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SUMMARY: We examine the relationship between auditor competition and the likelihood of financial restatements that occur as a result of failures in the application of generally accepted accounting principles (GAAP). Policy makers and audit market participants have expressed concern that the current level of auditor competition is low, resulting in a negative impact on audit quality. However, we find that restatements are more likely to occur in metropolitan statistical areas (MSAs) that have higher auditor competition. The association between audit market competition and restatements is statistically and economically significant. Our finding of a positive relationship between the likelihood of restatement and audit market competition is relevant to the ongoing debate regarding audit quality and the concentration of audit markets.

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Boone, Jeff P., Inder K. Khurana, and K. K. Raman. "Audit Market Concentration and Auditor Tolerance for Earnings Management*." Contemporary Accounting Research 29, no. 4 (April 10, 2012): 1171–203. http://dx.doi.org/10.1111/j.1911-3846.2011.01144.x.

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Francis, Jere R., Paul N. Michas, and Scott E. Seavey. "Does Audit Market Concentration Harm the Quality of Audited Earnings? Evidence from Audit Markets in 42 Countries*." Contemporary Accounting Research 30, no. 1 (June 21, 2012): 325–55. http://dx.doi.org/10.1111/j.1911-3846.2012.01156.x.

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Muniandy, Balachandran, and Muhammad Jahangir Ali. "Ownership concentration, political connection and audit fees: Some evidence from Malaysian capital market." Corporate Ownership and Control 9, no. 2 (2012): 400–409. http://dx.doi.org/10.22495/cocv9i2c4art2.

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The purpose of our study is to examine how share ownership concentration and political connection determine audit fees in Malaysia. These two determinants, ownership concentration and political connection, are very important, especially, in the context of Malaysia where many companies have very high share ownership concentration and are politically connected. We examine 162 companies listed on the Malaysian Stock Exchange and employ cross-sectional regression analysis to determine the relationship between ownership concentration, political connection and audit fees. We observe that highly concentrated share ownership firms are able to influence priorities of the board to focus on the provision of resources rather than monitoring. Our results suggest a negative association between audit fees and politically connected firms. We also find that higher proportion of independent directors on the audit committee of politically connected firms demand auditors to put additional efforts on the politically connected firms which leads to an increment in the audit fee charged. This suggests that regulators should encourage companies to form an effective audit committee for high quality audit services to ensure that firm is able to minimize the risk exposure. The findings of the study are appealing to literature of political connection and audit fees.

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Salehi, Mahdi, Mahdi Saravani, and Safoura Rouhi. "The relationship between audit components and audit market adaptability." Journal of Financial Crime 27, no. 3 (May 8, 2020): 835–53. http://dx.doi.org/10.1108/jfc-03-2020-0035.

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Purpose This study aims to study the relationship between audit components and collusion in the audit market. Design/methodology/approach The statistical population of the study includes 130 listed firms on the Tehran Stock Exchange from 2012-2017. The data tested using multivariate regression. Findings The findings of the study indicate that there is a positive and significant relationship between Rank A audit firms, competition and audit fees and audit market adaptability. The relationship standard fees and audit market adaptability, however, is negative and significant. Moreover, the results of the study show that there is no significant relationship between opinion shopping, type of audit report, audit market concentration, and agency costs with audit market adaptability. Originality/value The current study fills the gap in this area, and the results of the study may give direction to researchers and policy makers.

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Morawska, Sylwia, and Piotr Staszkiewicz. "Inherent Agency Conflict Built Into The Auditor Remuneration Model." Comparative Economic Research. Central and Eastern Europe 19, no. 4 (November 30, 2016): 141–59. http://dx.doi.org/10.1515/cer-2016-0034.

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This paper provides a model for audit market interventions. The study asks whether interventions in the audit market result in excessive premiums at the cost of quality and independence. The model was tested based on a historical data sample of 1,927 companies’ fiscal year financial statements, observed for the period 2010–2013. The testing strategy combined statistical analysis of the market concentration and regression of abnormal results. The findings do not support, for the Polish market, the conclusion that the audit market is used as a leverage for consulting services. This paper discusses possibilities of systematic risk for policymakers as a result of the negative interaction between regulated and non-regulated markets.

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Darmadi, Salim. "Ownership concentration, family control, and auditor choice." Asian Review of Accounting 24, no. 1 (February 1, 2016): 19–42. http://dx.doi.org/10.1108/ara-06-2013-0043.

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Purpose – The purpose of this paper is to extend the existing, yet limited, literature on the influence of ownership concentration and family control on the demands for high-quality audits. This study focusses on an emerging market, namely, Indonesia, where ownership concentration and family control are relatively higher than those in developed markets. Design/methodology/approach – The sample consists of 787 firm-year observations of public firms listed on the Indonesia Stock Exchange. Following prior studies, a firm is considered using a higher quality audit when its external auditor is one of the Big 4 audit firms. Logistic regressions are employed to test research hypotheses. Findings – Empirical evidence obtained reveals that firms with higher ownership concentration are more likely to hire a Big 4 auditor. Hence, in such firms, high-quality audits are employed to mitigate agency issues. However, when the controlling shareholder is a family, the association between ownership concentration and the demands for high-quality auditors turns negative, implying that family-controlled firms tend to sustain opaqueness gains by hiring lower quality auditors. Originality/value – Previous empirical studies examining the influence of ownership concentration and family control on auditor choice are relatively limited in the literature and are heavily focussed on developed economies. In addition, the present study is one of the first to investigate the association between family control and auditor choice in the context of a developing economy.

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Velte, Patrick. "What do we know about empirical joint audit research? A literature review." Accounting and Financial Control 1, no. 1 (April 19, 2017): 4–14. http://dx.doi.org/10.21511/afc.01(1).2017.01.

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This literature review evaluates empirical studies which concentrate on economic effects on joint audits from an international perspective. We briefly introduce the theoretical and empirical joint audit framework that comprises an adequate structure of the state-of-the-art of empirical research in this field. This is followed by a discussion of the following output factors of joint audits: (1) audit quality; (2) audit costs and (3) audit market concentration. We will summarize the key findings in each area, and provide a description of the analyzed proxies. Finally, we will discuss the current limitations of the studies and give useful recommendations for future empirical research activities in this topic.

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Mahendra, Made Edi, and I. Made Sadha Suardikha. "Pengaruh Tingkat Hutang, Fee Audit, dan Konsentrasi Pasar Pada Persistensi Laba." E-Jurnal Akuntansi 30, no. 1 (January 14, 2020): 179. http://dx.doi.org/10.24843/eja.2020.v30.i01.p13.

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This study aims to determine whether the level of debt, audit fees, and market concentration affect earnings persistence. This research was conducted on transportation companies listed on the Indonesian stock exchange from 2014 to 2017. The number of samples taken as many as 9 companies using non-probability sampling method with purposive sampling technique. The analysis technique used is multiple linear regression. Based on the results of the analysis found that the level of debt, audit fees, and market concentration has a positive effect on earnings persistence.Keywords: Debt Levels; Audit Fees; Market Concentration; Earnings Persistence.

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Al-Rassas, Ahmed Hussein, and Hasnah Kamardin. "Earnings quality and audit attributes in high concentrated ownership market." Corporate Governance 16, no. 2 (April 4, 2016): 377–99. http://dx.doi.org/10.1108/cg-08-2015-0110.

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Purpose The purpose of this study is to examine the effect of the audit committee (AC) independence, financial expertise, internal audit function, audit quality and ownership concentration on earnings quality (EQ) and, consequently, ascertain whether the AC’s independence and financial expertise has a moderating effect on the relationship between internal audit function and EQ. Design/methodology/approach The study sample is 508 firms listed on the Main Market of Bursa Malaysia (formerly known as Kuala Lumpur Stock Exchange) for the years 2009 to 2012. EQ was measured using two modified Jones models of discretionary accruals. Findings The findings reveal that the independence of AC and investment in internal audit function, as well as the Big4 audit firm, are related to greater EQ. Ownership concentration is found to be associated with lower EQ. The study provides evidence that AC’s independence moderates the relationship between internal audit function (investment in and sourcing arrangements of internal audit function) and EQ. It also shows that AC’s financial expertise moderates the relationship between sourcing arrangements of internal audit function and EQ. Practical implications This study extends the prior related literature by examining the AC’s independence and financial expertise as moderating variables on the relationship between internal audit function and EQ. Social implications Policymakers might use the findings regarding EQ in relation to governance practices, to recognize the important roles played by the AC’s independence and financial expertise on the effectiveness of internal audit function with EQ. Originality/value This study uses the agency theory and resource dependence theory to provide empirical evidence on the impact of internal audit function and AC on EQ in the ownership concentration environment.

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Doogar, Rajib, and Robert F. Easley. "Concentration without differentiation: A new look at the determinants of audit market concentration." Journal of Accounting and Economics 25, no. 3 (June 1998): 235–53. http://dx.doi.org/10.1016/s0165-4101(98)00027-5.

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Jeong, Kwang－Hwa, Tae－Hyun Cho, and Yi－Bae Kim. "Audit Market Concentration and Auditor Reappointment for Non－listed Firms." Journal of Taxation and Accounting 19, no. 4 (August 31, 2018): 107–27. http://dx.doi.org/10.35850/kjta.19.4.04.

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Clacher, Iain, Alan Duboisée de Ricquebourg, and Amy May. "Who gets all the PIE? Regulation of the statutory audit for private UK companies." Accounting, Auditing & Accountability Journal 32, no. 5 (June 17, 2019): 1297–324. http://dx.doi.org/10.1108/aaaj-12-2015-2341.

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Purpose While recently introduced EU regulation on the statutory audit of public interest entities (PIEs) aims to improve audit competition and quality, its success and impact depends on the definition of a PIE applied across the various EU Member States. In the UK, even though little is known about their auditing choices, these changes will not apply to most private companies despite their importance to the wider economy. The purpose of this paper is to provide an in-depth analysis of the private company audit market and examine the lobbying behaviour of the accounting profession around the definition of a PIE in the UK. Design/methodology/approach Using a large panel of independent private company audits in the UK and a textual analysis of submitted comment letters to a government consultation on the new regulation, this paper presents a comprehensive analysis of the audit market for private companies by measuring supplier concentration using four different measures of market share, and of the lobbying behaviour of the accounting profession. Findings There are two main findings. First, the private company audit market is characterised by low auditor switching rates along with a tight oligopoly of the largest independent private company audits maintained by the Big Four audit firms. Second, the lobbying behaviour of accounting and audit firms sought, and succeeded, to limit the scope of the definition of a PIE in the UK, consistent with the theoretical predictions of monopoly capitalism and the theory of professions. Originality/value The paper shows that the definition and scope of a PIE needs revisiting both within the UK and across all EU Member States, with a view to including more of these economically important private companies and highlights the policy challenge of increasing competition and choice in a concentrated audit market.

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Dunn, Kimberly, Mark Kohlbeck, and Brian W. Mayhew. "The Impact of the Big 4 Consolidation on Audit Market Share Equality." AUDITING: A Journal of Practice & Theory 30, no. 1 (February 1, 2011): 49–73. http://dx.doi.org/10.2308/aud.2011.30.1.49.

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SUMMARY: We investigate the Big 5 to Big 4 consolidation and its impact on audit market share equality. We extend the GAO’s (2008) study on audit firm industry market concentration to examine whether the remaining Big N firms’ market shares are more equal after the Big 4 consolidation. We also extend the GAO study to examine audit market shares at the city and city-industry levels. We find that while overall market concentration increases, the Big 4 have more equal market shares than the Big 5 had prior to the consolidation at all levels of analysis. The increase in market share equality may explain why there has been inconsistent evidence of an association between market concentration and competition after the consolidation (Feldman 2006; GAO 2008). However, we find that the largest four clients in each market we examine are more likely to share the same auditor after consolidation, which suggests the largest clients face constrained choices.

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PEARSON, TIM, and GREG TROMPETER. "Competition in the Market for Audit Services: The Effect of Supplier Concentration on Audit Fees." Contemporary Accounting Research 11, no. 1 (June 9, 1994): 115–35. http://dx.doi.org/10.1111/j.1911-3846.1994.tb00439.x.

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Steponavičiūtė, Jūratė, and Algis Zvirblis. "Main Principles of the Complex Assessment of Audit Market Concentration and Audit Services Quality Levels." Issues of Business and Law 3, no. -1 (May 1, 2011): 20–33. http://dx.doi.org/10.2478/v10088-011-0003-7.

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Yebba, Alfred A., and Randal J. Elder. "The Effects of State-Level GAAP Regulation on Municipal Audit Markets, Reporting Quality, and Audit Fees." Journal of Governmental & Nonprofit Accounting 8, no. 1 (August 1, 2019): 36–74. http://dx.doi.org/10.2308/ogna-52541.

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ABSTRACT We examine the effects of financial statement disclosure regulation on auditor market concentration, reporting quality, and audit pricing. We compare auditor industry concentration levels for municipalities reporting under the Single Audit Act in the state of Michigan, which requires GAAP reporting, with concentration rates in Pennsylvania, which has unregulated reporting. We find an association between a comprehensive GAAP disclosure policy and auditor concentration. The disclosure-regulated state also has higher demand for auditor specialization and reporting quality, as evidenced through lower reporting of material weaknesses and shorter reporting lags. Specialist auditors in both environments are associated with greater reporting of control exceptions, but specialization is only associated with shorter reporting lags with disclosure regulation. Using a small sample of survey data for one year, we find evidence that audit pricing is lower in the regulated state, and that specialist pricing varies based on regulation and each specialist audit firm's market positioning.

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Antoniuk, Olena, Natalya Kuzyk, Iryna Zhurakovska, Roman Sydorenko, and Liudmyla Sakhno. "The role of «BIG FOUR» auditing firms in the public procurement market in Ukraine." Independent Journal of Management & Production 11, no. 9 (November 1, 2020): 2483. http://dx.doi.org/10.14807/ijmp.v11i9.1432.

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The authors conducted a study aimed to identify the role of «Big Four» («Big 4») audit firms in the public procurement market in Ukraine.The purpose of the article is to answer the questions: whether Ukraine is in a general trend of most countries in the concentration of audit market; what is the share of revenues of the «Big Four» audit firms in the performance of audit services in the public procurement system in Ukraine. First of all, in order to get answers to these questions, the authors conducted a study of the main trends in the development of the «Big Four» companies in Ukraine. It was found that the characteristic competitive environment in the market of audit services, the impact on competitiveness of pricing policy and regulatory requirements, relating to the acquisition of audit services by public sector entities through a public procurement system "ProZorro". An element of price regulation and compliance with the transparent conditions of the competitive environment is the participation of audit firms in the public procurement system. As a result of processing data on procurement of audit services for the period 2008-2019, the authors calculated key indicators that characterize the concentration of the audit market. Based on the data on the amount of remuneration for various types of audit services using the public procurement system "ProZorro", aspects of pricing policy and the role of the companies of the "Big Four" in the market were established. The values indexes indicate that the companies of the «Big 4» do not have a complete monopoly in the segment of procurement of audit services, having certain dominant positions in some years, and the indexes indicate a trend towards effective competition in the audit services market in Ukraine.

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Hogan, Chris E., and Debra C. Jeter. "Industry Specialization by Auditors." AUDITING: A Journal of Practice & Theory 18, no. 1 (March 1, 1999): 1–17. http://dx.doi.org/10.2308/aud.1999.18.1.1.

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Dramatic changes in recent years in the audit market suggest the timeliness of an investigation of trends in auditor concentration and an extension of prior research (e.g., Danos and Eichenseher 1982). In recent press, large audit firms have claimed that specialization is a goal of increasing importance. Peat Marwick, for example, has restructured along industry lines, claiming to be recruiting professionals for national teams of multidisciplinary experts organized to “focus on the same industry to serve clients optimally.” On the other hand, litigation concerns might prompt auditors to diversify their risks by diversifying their clientele. In this study, we examine trends in industry specialization from 1976 to 1993 and the industry factors which may affect specialization; whether market share increases are greater for audit firms classified as specialists; and whether the nation's largest audit firms have increased their market share in the industries which they have identified as their focus industries. We find evidence that concentration levels have increased over this period, consistent with the claims of the large audit firms. We find that auditor concentration levels are higher in regulated industries, in more concentrated industries and in industries experiencing rapid growth, but lower in industries with a high risk of litigation. Levels of concentration have increased over time in nonregulated industries providing evidence that scale economies or superior efficiencies of heavy-involvement auditors are not limited to regulated industries but extend to nonregulated industries as well. We also find that for the audit firms classified as market leaders at the beginning of the year, market share has increased over time, whereas market share has declined for firms with a smaller share at the beginning of the year. This suggests that there are returns to investing in specialization.

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Hogan, Chris E., and Roger D. Martin. "Risk Shifts in the Market for Audits: An Examination of Changes in Risk for “Second Tier” Audit Firms." AUDITING: A Journal of Practice & Theory 28, no. 2 (November 1, 2009): 93–118. http://dx.doi.org/10.2308/aud.2009.28.2.93.

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SUMMARY: The market for audit services has been affected in recent years by significant changes like the demise of Andersen and the implementation of the Sarbanes-Oxley Act of 2002. One impact of these market changes has been an increase in the frequency of auditor switches, and in particular, the frequency of clients switching from Big 4 auditors to smaller audit firms. We examine whether this switching activity has resulted in changes in the risk characteristics of publicly traded clients of Second Tier audit firms. This analysis is important as regulators are concerned about audit market concentration and would like to see the Second Tier audit firms expand their share of the publicly traded client market. Results indicate that Second Tier firms are accepting clients with potentially increased audit and client business risk characteristics relative to their existing client base, but they also appear to be “shedding” clients that have increased audit and client business risk characteristics relative to their existing client base. Some of the differences in risk characteristics for those departing clients are more pronounced in the period after 2000, when we expect the most significant changes in the audit market occurred. Second Tier auditors are increasingly exposed to more business risk as they accept larger clients coming from Big 4 predecessor auditors, which may increase their exposure to litigation.

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DeFond, Mark L., T. J. Wong, and Shuhua Li. "The impact of improved auditor independence on audit market concentration in China." Journal of Accounting and Economics 28, no. 3 (December 1999): 269–305. http://dx.doi.org/10.1016/s0165-4101(00)00005-7.

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Schaen, Markus, and Steven Maijoor. "The Structure of the Belgian Audit Market: the Effects of Clients' Concentration and Capital Market Activity." International Journal of Auditing 1, no. 2 (July 1997): 151–62. http://dx.doi.org/10.1111/1099-1123.00019.

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Journal articles on the topic 'Audit market concentration'

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