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Audit Market (audit + market)
Selected AbstractsDiscussion of "The Riskiness of Large Audit Firm Client Portfolios and Changes in Audit Liability Regimes: Evidence from the U.S. Audit Market",CONTEMPORARY ACCOUNTING RESEARCH, Issue 4 2004MARK L. DeFOND [source] Competition and Big 6 Brand Name Reputation: Evidence from the Ontario Municipal Audit Market,CONTEMPORARY ACCOUNTING RESEARCH, Issue 1 2001SATI P. BANDYOPADHYAY Abstract The 1991 amendment to the auditor appointment requirement of section 86 of the Ontario Municipal Act removes certain barriers to entry into the Ontario municipal audit market. The purpose of this study is to provide evidence that the amendment has enhanced competition in this market. The results indicate that there is a general reduction in the real municipal audit fees compared with the pre-amendment levels, and that the market has become more contestable following the amendment. Notwithstanding the heightened competition, the Big 6 audit firms continue to command audit fee premiums over the non-Big 6 audit firms. This suggests that Big 6 audit fee premiums possibly reflect brand name reputation rather than monopoly/oligopoly rents. [source] Auditor Independence: A Comparative Descriptive Study of the UK, France and ItalyINTERNATIONAL JOURNAL OF AUDITING, Issue 2 2002Joanna E. Stevenson The independence of the external auditor has long been a subject of great debate, particularly by UK and US interested parties. With the growth and globalisation of the large multi-disciplinary firms, it has again been pushed to the fore: new ethical guidance issued by international bodies such as La Fédération des Experts- Comptables Européens (FEE) and The International Federation of Accountants (IFAC) and the activities of the Securities and Exchange Commission (SEC) and Independence Standards Board in the US have encouraged a wider consideration of the issue. In Europe, the European Commission has issued a Consultative Paper containing fundamental principles for adoption into Member States' own regulation on statutory auditor independence. Increasing pressure for the removal of obstacles to a single European audit market have resulted in safeguards of auditor independence in some countries being described as undesirable barriers. This paper considers the issue of statutory auditor independence across three EU Member States: the UK, France and Italy, by comparing the ethical guides and the legal and professional regulations in place, highlighting and discussing areas of divergence, and contrasting them with the EC's Consultative Paper. It takes into account factors such as culture and the historical development of auditing in order to explore the differences found. The paper demonstrates that positions taken in France and Italy on the issue of auditor independence differ markedly from that taken by the UK profession. Of the three countries reviewed, the UK viewpoint has most obviously influenced the drafting of the EC Paper. The implications of these variances for EU harmonisation are discussed, and the paper concludes that there is a clear need for empirical study of this important issue in Europe to better understand the reasons for differing perceptions and attitudes, and the repercussions of these differences on the process of European audit harmonisation. [source] Demand and Supply of Auditing in IPOs: An Empirical Analysis of the Québec MarketINTERNATIONAL JOURNAL OF AUDITING, Issue 3 2000Jean Bédard This study examines the factors affecting the demand for higher-quality auditors at the time of an initial public offering in a small market characterized by low-litigation risk, government subsidies for companies going public, and the presence of large non-Big Six auditors, namely, the Canadian province of Québec. Our results, from an analysis of 212 Québec IPOs between 1983 and 1997, indicate that the choice of an auditor at the time of an IPO is significantly affected by the company's risk, size, and geographical dispersion. They also suggest that the Québec audit market is segmented between three types of service providers: the Big Six, the National firms and the Local firms. Local firms audit small local companies with low risk, National firms audit large local companies with moderate risk, and the Big Six audit large geographically dispersed companies with high risk. [source] The Impact of the Big 8 Mergers on Market Power: Evidence from the Hong Kong MarketJOURNAL OF INTERNATIONAL FINANCIAL MANAGEMENT & ACCOUNTING, Issue 1 2005Dominica Suk-yee Lee This study examines the impact of the Big 8 mergers on market power in an audit market where the merging firms have little presence. Audit fee changes for each merger participating firm are identified and fee changes for several post-merger years are examined. The pre-merger differential market power between the merging and non-merging long-established Big 8 firms (Price Waterhouse and KPMG Peat Marwick) in Hong Kong provides a unique opportunity to examine whether the mergers could help the merging firms to increase their market power. The results are consistent with the hypotheses that the audit fees of the merging firms were significantly lower than that of the non-merging, long-established Big 8 firms before the mergers, but the audit fees of the merged firms increased significantly to a level comparable with that of the latter group after the mergers. In addition, the market share of the merged firms increased significantly after the mergers. However, no association is found between market concentration and market power. Overall, the results show that the Big 8 mergers have helped the merged firms increase their market power and market share in the Hong Kong audit market where they had little presence. [source] Improving Auditor Independence Through Selective Mandatory RotationINTERNATIONAL JOURNAL OF AUDITING, Issue 2 2002Miles B. Gietzmann When an auditor receives significant fee income from one client it has often been suggested that reappointment concerns may dilute auditors incentives to maintain independence from management. A possible response to this issue could be to mandate the rotation of auditors. However this is costly since new auditors must repeatedly invest in learning a new clients accounting system. In this research we build a model to formally analyze this trade-off. We find that the desirability of rotation depends critically upon characteristics of the audit market structure and to what extent an individual client dominates an auditors' client portfolio defined in terms of total fees. We show that although rotation is costly, in audit markets with relatively few large clients (thin markets), the resulting improved incentives for independence outweigh the associated costs. Our research is timely because although historically it may not have been economically desirable to adopt mandatory rotation, currently with increased corporate merger activity taking place, for instance in the oil sector, markets may now have become sufficiently thin to warrant the introduction of rotation. [source] Legal Liabilities, Audit Accuracy and the Market for Audit ServicesJOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 3-4 2002Sankar De In quality-differentiated audit markets with client-firms of unknown types, insider-managers of client firms strategically select auditors who respond to legal liabilities to decide their care level. In this signaling game, uninformed-investors use the audit report and the auditors' identity for firm valuation. The analysis shows that increased legal liability increases the auditor's effort and audit accuracy but reduces the demand for high quality auditing because, apart from the increased audit costs, the adverse selection benefit of the worse type reduces with increased accuracy. Furthermore, alternative legal regimes and damage allocation rules alter informational efficiency of the financial market. [source] | ||||||||||