And then there were four: A study of UK audit market concentration ‐ causes, consequences and the scope for market adjustment

Beattie, Vivien; Goodacre, Alan; Fearnley, Stella

doi:10.1108/13581980310810561

Cited by 82 publications

(71 citation statements)

References 12 publications

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“…these industries. Thus our results, based on a multi-country sample, are consistent with U.K. studies by Beattie, Goodacre, andFearnley 2003 andOxera 2006, which find that a growing number of industries in the United Kingdom are dominated by a subset of the Big 4 accounting firms.…”

Section: Resultssupporting

confidence: 91%

Does Audit Market Concentration Harm the Quality of Audited Earnings? Evidence from Audit Markets in 42 Countries*

Francis

Michas

Seavey

2012

Contemporary Accting Res

236

150

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Audit regulators around the world have expressed concern over market dominance by Big 4 accounting firms and the potential adverse effect it may have on the quality of audited financial statements. We use cross‐country variation in the audit market structure of 42 countries to examine two separate aspects of Big 4 dominance: (1) Big 4 market concentration as a group relative to non–Big 4 auditors; and (2) concentration within the Big 4 group in which one or more of the Big 4 firms is dominant relative to the other Big 4 firms. We find that in countries where the Big 4 (as a group) conduct more listed company audits, both Big 4 and non–Big 4 clients have higher quality audited earnings compared to clients in countries with smaller Big 4 market shares. In contrast, in countries where there is a greater concentration within the Big 4 group, we find that Big 4 clients have lower quality audited earnings compared to countries with more evenly distributed market shares among the Big 4. Thus concentration within the Big 4 group appears to be detrimental to audit quality in a country and of legitimate concern to regulators and policymakers. However, Big 4 dominance per se does not appear to harm audit quality and is in fact associated with higher earnings quality, after controlling for other country characteristics that potentially affect earnings quality.

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Section: Resultssupporting

confidence: 91%

Does Audit Market Concentration Harm the Quality of Audited Earnings? Evidence from Audit Markets in 42 Countries*

Francis

Michas

Seavey

2012

Contemporary Accting Res

236

150

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“…Současný výzkum považuje za nejvhodnější měřítko koncentrace na trhu auditorských služeb celkové odměny auditorovi, které společnosti musí uvádět ve svých závěrkách v členění na auditorské a ostatní služby. Beattie et al (2003) uvádí analýzu koncentrace trhu auditorských služeb u společ-ností kótovaných na burze ve Velké Británii v době, kdy došlo k fúzi společnosti Arthur Andersen se společností Ernst &Young (EY). Dochází k závěru, že 96 % trhu je ovlá-dáno 4 společnostmi (Big4 -KPMG, PricewaterhouseCoopers (PwC), Deloitte, EY), přičemž nejsilnější z nich (PwC) dosahuje tržního podílu 37 %.…”

Section: Přehled Literatury a Odvození Výzkumných Hypotézunclassified

“…Na základě provedené analýzy tedy můžeme vyvrátit hypotézu H3. Beattie et al (2003) Zajímavá zjištění nabízí i porovnání ukazatelů koncentrace pro oblast auditorských odměn mezi lety 2011-2014, které zobrazuje tabulka 9. Z vývoje mezi lety 2011-2014 vyplývá, že koncentrace na trhu auditorských služeb se mírně zvyšuje, což nás vede k potvrzení hypotézy H4.…”

Section: Výsledky a Diskuse A) Tržní Podílunclassified

Market Concentration of Audit Services in the Czech Republic: Empirical Evidence (Focusing on Auditors of Public Interest Entities)

Šindelář¹,

Müllerová²

2016

Politicka ekonomie

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Market Concentration of Audit Services in the Czech Republic: Empirical Evidence (Focusing on Auditors of Public Interest Entities)The aim of this paper is to analyze the market concentration of audit services in the Czech Republic and compare its results with the international research. The analysis is based on transparency reports for years [2011][2012][2013][2014]. Auditors that in the reporting period carried out the statutory audit at some public interest entity are required to compile and publish the transparency report. Among other information, auditors are required to specify their total turnover split into turnover of audit fees and turnover of non-audit fees. Globally recognized Herfi ndahl-Hirschman index is selected as an appropriate analytical tool. Herfi ndahl-Hirschman index is complemented by indicators of market share (Current ratios) and the Lorenz curve which graphically displays the unequal distribution of the turnover on the market of audit services. These data show that in the period under investigation the fi rms forming Big4 obtained about 85% of audit fees. In the year 2014 the Big4 fi rms occupied 80% of total fees and 84% of audit fees. As a major player on the Czech market of audit services can be regarded two fi rms -Ernst & Young (EY) in the area of total fees and KPMG in the area of audit fees. The analysis clearly indicates a high level of market concentration of audit services in the Czech Republic. The high level of market concentration has its impacts on the audit quality and leads Authorities in the US and in the EU to the tightening of audit regulation.

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“…Their results indicate that reaches PricewaterhouseCoopers leadership with a 19.5% market share calculated based on the surrogate of the number of audits, on the other hand, based on the fees billed reaches the second place in the ranking of the Big Five with 22.3% of market share achieved. Beattie et al, (2003) to carry out their study simulated the effects of the merger between large international firms (Arthur Andersen and Deloitte & Touche) analyzed a sample of the 2,189 companies listed on the London Stock Exchange. The results highlight that following the merger of the two firms reached a projected market share of 96% for the four major international firms (Big 4), noting also that the international firm (PriceWaterhouseCoopers) absorbed a market share greater than 70% in six of the thirty-eight sectors analyzed and a 50% share in seven.…”

Section: Literature Reviewmentioning

confidence: 99%

“…The study of the financial audit market structure, its competitive nature and its high level of concentration have been analyzed by a significant number of empirical studies collected by the accounting research literature (Zeff and Fossum, 1967;Rhode, Whitsell and Kelsey, 1974;Danos and Eichenseher, 1986;Moizer and Turley, 1987;Beattie and Fearnley, 1994;Wolk, Michelson and Wootton, 2001;Thavapalan, Moroney, and Simnett, 2002;Beattie, Goodacre and Fearnley, 2003;Carrera, Gutierrez and Carmona, 2005;Feldman, 2006;McMeeking, Peasnell and Pope, 2007;McMeeking, 2007;García Benau and Novejarque, 2009;Caban-García and Cammack (2009) ;Kallapur, Sankaraguruswamy and Zang, 2010;Dunn, Kohlbeck and Mayhew, 2011). The high level of concentration in the market for financial audit services has caused a negative impact, on the world professional practices, which are currently evident and affect the very essence of the professional practice of financial audit services.…”

Section: Introductionmentioning

confidence: 99%

Structure and Nature of Competition in the Market for Financial Audit Services in Mexico

Toscano

Benau²

2014

JBAR

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The structural paradigm emphasizes that the nature of competition in a market, is closely related to the structure of the market and in particular its level of concentration. The objective of this research work is to present empirical evidence on the structure and nature of competition in the market for financial audit services in Mexico during the period from 2000 to year 2007. To do this, we have calculated several measures of concentration, using a sample of 1,344 financial audit reports of companies that are registered as issuers of shares in the capital market of the Stock Exchange in Mexico. The results show that the market for financial audit market in Mexico is highly concentrated and under the control of a few audit firms, specifically of Large International Firms, better known in the field business around the world as the "Big 4". Also the results show that the nature of the competition in the market for financial audit services in Mexico is that, in imperfect markets, known as an oligopoly.

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And then there were four: A study of UK audit market concentration ‐ causes, consequences and the scope for market adjustment

Cited by 82 publications

References 12 publications

Does Audit Market Concentration Harm the Quality of Audited Earnings? Evidence from Audit Markets in 42 Countries*

Does Audit Market Concentration Harm the Quality of Audited Earnings? Evidence from Audit Markets in 42 Countries*

Market Concentration of Audit Services in the Czech Republic: Empirical Evidence (Focusing on Auditors of Public Interest Entities)

Structure and Nature of Competition in the Market for Financial Audit Services in Mexico

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