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

Dressing for the Occasion? Audit Quality in the Presence of Competition for New Clients

2021 ◽  
Author(s):  
Henrik Moser
Keyword(s):  
Audit Quality ◽  
Market Competition ◽  
New Approach ◽  
Auditor Choice ◽  
Audit Market ◽  
Auditor Quality ◽  
The Impact

This paper investigates the impact of increased audit market competition on audit quality and auditor choice. I develop a model comprising two auditors who compete for a new client by choosing the audit quality for their respective existing clients and using the audited report as a signal. I identify factors that influence auditor quality decisions as well as the behavior of clients, who potentially misstate their reports. Auditors are tempted to alter audit quality because they are eager to appear desirable from a new client's perspective. Interestingly, while recipients of the audited report adjust their conjectures about audit quality, there are conditions under which auditors lower their audit quality to increase the likelihood of being hired. The analysis extends the existing literature by describing a new approach to modeling the auditors' motivation to signal reputation for certain behavior.

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.

scholarly journals Internal Control Opinion Shopping and Audit Market Competition

2015 ◽  
Vol 91 (2) ◽  
pp. 603-623 ◽  
Author(s):  
Nathan J. Newton ◽  
Julie S. Persellin ◽  
Dechun Wang ◽  
Michael S. Wilkins
Keyword(s):  
Internal Control ◽  
Audit Quality ◽  
Market Competition ◽  
Policy Debate ◽  
Current Policy ◽  
Empirical Results ◽  
Audit Market ◽  
Opinion Shopping ◽  
The Impact

ABSTRACT This study examines the extent to which audit clients successfully engage in internal control opinion shopping activities and whether audit market competition appears to facilitate those activities. Regulators have long been concerned about the impact of both audit market competition and opinion shopping on audit quality. We adopt the framework developed in Lennox (2000) to construct a proxy to measure the tendency that clients engage in internal control opinion shopping activities. Our empirical results suggest that clients are successful in shopping for clean internal control opinions. In addition, we find evidence that internal control opinion shopping occurs primarily in competitive audit markets. Finally, our results indicate that among auditor dismissal clients, opinion shopping is more likely to occur when dismissals are made relatively late during a reporting period and when audit market competition is high. Our findings have implications for the current policy debate regarding audit quality and audit market competition.

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

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 Malpractice Environment vs Direct Litigation: What Drives Nursing Home Exit?

2018 ◽  
Vol 55 ◽  
pp. 004695801878799
Author(s):  
R. Tamara Konetzka ◽  
Hari Sharma ◽  
Jeongyoung Park
Keyword(s):  
Nursing Home ◽  
Nursing Homes ◽  
Fixed Effects ◽  
Online Survey ◽  
Market Competition ◽  
Consumer Welfare ◽  
Data Sets ◽  
For Profit ◽  
The Impact ◽  
The Relationship

An ongoing concern about medical malpractice litigation is that it may induce provider exit, potentially affecting consumer welfare. The nursing home sector is subject to substantial litigation activity but remains generally understudied in terms of the effects of litigation, due perhaps to a paucity of readily available data. In this article, we estimate the association between litigation and nursing home exit (closure or change in ownership), separating the impact of malpractice environment from direct litigation. We use 2 main data sources for this study: Westlaw’s Adverse Filings database (1997-2005) and Online Survey, Certification and Reporting data sets (1997-2005). We use probit models with state and year fixed effects to examine the relationship between litigation and the probability of nursing home closure or change in ownership with and without adjustment for malpractice environment. We examine the relationship on average and also stratify by profit status, chain membership, and market competition. We find that direct litigation against a nursing home has a nonsignificant effect on the probability of closure or change in ownership within the subsequent 2 years. In contrast, the broader malpractice environment has a significant effect on change in ownership, even for nursing homes that have not been sued, but not on closure. Effects are stronger among for-profit and chain facilities and those in more competitive markets. A high-risk malpractice environment is associated with change of ownership of nursing homes regardless of whether they have been directly sued, indicating that it is too blunt an instrument for weeding out low-quality nursing homes.

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