scholarly journals The Effect of Audit Market Competition on Audit Fee Stickiness

2018 ◽  
Vol null (58) ◽  
pp. 57-75
Author(s):  
Park Hyun Jae
Keyword(s):  
Market Competition ◽  
Audit Market ◽  
Audit Fee

The Relationship between Audit Market Competition and Audit Fee

2017 ◽  
Vol 35 (1) ◽  
pp. 185-215
Author(s):  
Hyun Jae Park ◽  
Jaewan Park ◽  
Hye Jeong Nam
Keyword(s):  
Market Competition ◽  
Audit Market ◽  
Audit Fee ◽  
The Relationship

Impact of Audit Fee Deregulation on Audit-market Competition

2009 ◽  
Vol 16 (1) ◽  
pp. 69-94 ◽  
Author(s):  
Wen-Jing Chang ◽  
Yahn-Shir Chen ◽  
Meng-Pei Chan
Keyword(s):  
Market Competition ◽  
Audit Market ◽  
Audit Fee

Changes in Audit Market Competition and the Big N Premium

2012 ◽  
Vol 31 (3) ◽  
pp. 47-73 ◽  
Author(s):  
Elizabeth Carson ◽  
Roger Simnett ◽  
Billy S. Soo ◽  
Arnold M. Wright
Keyword(s):  
European Commission ◽  
Market Power ◽  
Market Competition ◽  
Big 5 ◽  
Audit Market ◽  
Big 4 ◽  
Audit Firms ◽  
House Of Lords ◽  
Audit Fee ◽  
The Impact

SUMMARY We respond to calls for research into the effect of the decline in the number of Big N firms on market power and consequential impact on competition (U.S. Department of the Treasury 2008; European Commission 2010; U.K. House of Lords 2011) by analyzing the change in Big N audit fee premium over the Big 6, Big 5, and Big 4 periods, and across different client segments. Using a large sample of Australian publicly listed companies over the years 1996–2007, we find that while premiums paid to Big N auditors have increased significantly for the Big 4 and Big 5 periods compared to the Big 6 period, the growth has not been shared equally across all client segments. In particular, while the largest global clients pay some of the highest premiums, the increase in premiums for this group in the Big 4 period has been lower than those experienced by other clients. We also observe that premiums paid to industry specialists have declined relative to the Big 6 period, but fee discounts offered to clients switching to a Big N auditor from a non-Big N auditor have increased. In all, we find that the premiums paid by Big N clients increased in line with consolidation in the number of Big N audit firms, but the impact varied across client segments.

Market Competition, Audit Fee Stickiness, and Audit Quality: Evidence from China

2018 ◽  
Vol 38 (2) ◽  
pp. 79-99 ◽  
Author(s):  
Hsihui Chang ◽  
Yingwen Guo ◽  
Phyllis Lai Lan Mo
Keyword(s):  
Earnings Management ◽  
Audit Quality ◽  
Market Competition ◽  
Positive Association ◽  
Certified Public Accountants ◽  
Listed Firms ◽  
Audit Market ◽  
Audit Firms ◽  
Audit Fee ◽  
Auditor Reporting

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.

Spatial Competition in Local Audit Markets and the Fallout on Deloitte from the 2007 PCAOB Censure

2016 ◽  
Vol 36 (2) ◽  
pp. 1-19 ◽  
Author(s):  
Jeff P. Boone ◽  
Inder K. Khurana ◽  
K. K. Raman
Keyword(s):  
Market Power ◽  
Audit Quality ◽  
Spatial Competition ◽  
Spatial Location ◽  
Audit Fees ◽  
Audit Market ◽  
Big 4 ◽  
Audit Fee ◽  
The Face ◽  
Market Leader

SUMMARY We examine whether Deloitte's spatial location in local audit markets affected the firm's adverse fallout—in terms of decreased ability to retain new clients and maintain audit fees—from the 2007 PCAOB censure. We motivate our inquiry by the notion that auditor-client alignment and auditor-closest-competitor distance can help differentiate the incumbent Big 4 auditor from other Big 4 auditors and thus provide market power, i.e., inhibit clients from shopping for another supplier because of the lack of a similar Big 4 provider in the local audit market. Consequently, it seems reasonable that the increase in switching risk and loss of fee growth suffered by Deloitte following the 2007 PCAOB censure will be lower in local markets where Deloitte was the market leader and its market share distance from its closest competitor was greater. Our findings suggest that the decline in Deloitte's audit fee growth rate following the 2007 PCAOB censure was concentrated in the pharmaceutical industry, although the client loss rate appears to have occurred more broadly (across all cities and industries). Collectively, our findings suggest that audit quality issues override auditor market power, i.e., differentiation does not provide Big 4 firms market power in the face of adverse regulatory action. JEL Classifications: G18; L51; M42; M49.

The effect of auditor narcissism on audit market competition

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Hojat Mohammadi ◽  
Mahdi Salehi ◽  
Meysam Arabzadeh ◽  
Hassan Ghodrati
Keyword(s):  
Financial Markets ◽  
Significant Relationship ◽  
Design Methodology ◽  
Audit Quality ◽  
Stock Exchange ◽  
Market Competition ◽  
Competitive Pressure ◽  
Content Type ◽  
Listed Firms ◽  
Audit Market

Purpose This paper aims to assess auditor narcissism’s effect on audit market competition (auditor concentration, clients’ concentration and competitive pressure). Design/methodology/approach This paper’s method is descriptive-correlational based on published information from listed firms on the Tehran Stock Exchange from 2012 to 2018 using a sample of 188 firms (1,310 observations). The method used for hypothesis testing is linear regression using panel data. Findings The results show a negative and significant relationship between auditor narcissism and audit market competition and its indices, including auditor concentration, clients’ concentration and competitive pressure. Moreover, a positive and significant relationship was observed between audit quality and audit market competition and its indices, including auditor concentration, client concentration and competitive pressure. Originality/value To analyzes competition indices in the audit market (auditor concentration, clients’ concentration and competitive pressure). The variable is assessed once more using the exploratory factor analysis of the so-called three variables single variable, named audit market competition. So the central question of the study is investigated within a broader sense. Moreover, as the present study is carried out in the emergent financial markets with extremely competitive audit markets to figure out the effect of auditors’ intrinsic characteristics on such markets’ competitiveness, it can provide useful information in this field.

scholarly journals AUDIT MARKET COMPETITION: AUDITOR CHANGES AND THE IMPACT OF TENDERING

1998 ◽  
Vol 30 (3) ◽  
pp. 261-289 ◽  
Author(s):  
VIVIEN BEATTIE ◽  
STELLA FEARNLEY
Keyword(s):  
Market Competition ◽  
Audit Market ◽  
The Impact

scholarly journals Analyst Coverage And Audit Efforts: Empirical Approach To Audit Hours

2015 ◽  
Vol 31 (3) ◽  
pp. 795 ◽  
Author(s):  
Hong Min Chun ◽  
Chang Seop Rhee
Keyword(s):  
Measurement Error ◽  
Global Financial Crisis ◽  
Positive Relation ◽  
Financial Analyst ◽  
Analyst Following ◽  
Analyst Coverage ◽  
Audit Failure ◽  
Audit Market ◽  
Audit Fee ◽  
Unique Dataset

This study investigates the effect of financial analyst coverage on audit efforts by examining the association between the number of analyst followings and audit hours. Existing literatures report that there are inconsistent results between analyst coverage and audit efforts, and most studies used audit fee as a proxy for audit efforts. However, audit fee may cause measurement error. We consider that audit hour is a better proxy for measuring audit efforts than audit fee because practically auditors are less likely to charge extra audit fee for their additional efforts in competitive audit market. Also, after audit engagement contract, the amount of audit fee is almost fixed. Thus, it cannot reflect variable auditors decision whether inputting additional efforts or not during audit service. Intuitively, audit hours are more accurate measure of audit efforts as long as it indicates how much hours auditors work. For the above reasons, we use unique dataset of audit hours in Korea. We find that analyst coverage is positively associated with audit hour. This means auditors make more efforts on their audit service in case of greater analyst following, and they crucially consider reputational damage from audit failure when they provide audit services to their clients with great analyst following. Next, we still observe positive relation in both pre and post global financial crisis periods. Lastly, we find that BIG4 auditors are more concerned about reputational loss than Non-Big4 in case of greater analyst following.

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