The Interdependence between the Structure of the Audit Market and the Quality of Audited Financial Statements: The Case of Non-Audit Services

Bleibtreu, Christopher; Stefani, Ulrike

doi:10.2139/ssrn.2614860

Cited by 5 publications

(11 citation statements)

References 176 publications

(42 reference statements)

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“…We regard circular market matching models as suitable for simultaneously analyzing the incentive effects and market structure effects of regulations. The idea is to extend a circular market matching model in a way that captures the regulation's effect on the cost structures of audit firms, like, for example, done in the analytical papers of Bleibtreu and Stefani (2018) and Bleibtreu and Stefani (2020).…”

Section: Vii2 Spatial Competition Modelsmentioning

confidence: 99%

“…Studies that use spatial competition models to explicitly investigate the interdependencies between the incentive effects and the market structure effects of audit regulations are Bleibtreu and Stefani (2018) and Bleibtreu and Stefani (2020). Both studies are based on the Salop (1979) model that allows modelling potential market entries and exits of audit firms.…”

Section: Vii4 Analytical Spatial Competition Models Investigating The...mentioning

confidence: 99%

“…Bleibtreu and Stefani (2018) conclude that the desired effects of a decrease in client importance and a decrease in audit market concentration cannot be achieved simultaneously, but that the goals are in direct contrast (i.e., a decrease in client importance comes along with an increase in audit market concentration and vice versa). Bleibtreu and Stefani (2020) address the effects of a prohibition on the joint supply of AS and NAS on market structure and financial reporting quality. To do so, they combine an extensive-form game with imperfect information that covers the auditor-client interaction with a circular market matching model that allows endogenizing the number of competing audit firms.…”

Section: Vii4 Analytical Spatial Competition Models Investigating The...mentioning

confidence: 99%

See 2 more Smart Citations

Audit Regulations, Audit Market Structure, and Financial Reporting Quality

Bleibtreu

Stefani

2021

FNT in Accounting

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Section: Vii2 Spatial Competition Modelsmentioning

confidence: 99%

Section: Vii4 Analytical Spatial Competition Models Investigating The...mentioning

confidence: 99%

Section: Vii4 Analytical Spatial Competition Models Investigating The...mentioning

confidence: 99%

See 1 more Smart Citation

Audit Regulations, Audit Market Structure, and Financial Reporting Quality

Bleibtreu

Stefani

2021

FNT in Accounting

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“…Apart from the generally discussed aspects of the auditor independence and audit quality, the formal EU proposal of the NAS restrictions encountered some initial arguments against it. For example, Bleibtreu and Stefani (2012) suggest as a potential consequence of the NAS restrictions a decrease in the equilibrium number of audit firms (in other words an increase in market concentration) and even negative effects on the quality of audited financial statements. Ratzinger-Sakel and Schönberger (2015) compare the EU regulation with the national requirements in France, Germany and the UK, focus on the NAS cap and the blacklist approach, and provide their justification why the reform might not be successful in its design.…”

Section: Nas and The Implications Of The Audit Regulationsmentioning

confidence: 99%

The Audit Reform and Non-Audit Services in the Light of the Big-4 Transparency Reports – the EU Perspective

Indyk¹

2020

AEF

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The aim of this article is to compare and contrast three different approaches towards non-audit services (henceforth “NAS”) based on: 1) researchers’ views, 2) the EU regulation, and 3) the provision of NAS by the Big-4 firms operating in twenty-seven EU member states. Therefore, the article includes: (i) a literature review of various NAS aspects, (ii) an analysis of the EU reform in terms of NAS, and (iii) an empirical analysis of NAS fees which have been disclosed in the Big-4 transparency reports for the period 2017-2019.The literature review shows: a) lack of consensus between researchers about the potential consequences of the NAS provision in general, b) quite limited or little evidence of the consequences of the NAS restrictions as part of the EU audit reform, c) ambiguity in terms of the NAS definition itself which results mainly from insufficient NAS disclosures and lack of a detailed NAS split.The EU regulators addressed these concerns only in very narrow aspects, i.e., through: (1) the NAS black list, (2) the NAS cap, and (3) the strong emphasis on public-interest entities (henceforth “PIEs”). What is more, NAS disclosure requirements in the transparency reports are limited only to two categories.Finally, the results of the empirical study indicate the significant differences at the NAS fee level among the EU member states. The analysis shows a particular importance of NAS fees from other clients as a substantial revenue stream for the Big-4 firms. The results suggest also a significant increase in this category in 2018 when NAS fees from other clients increased by net EUR809 million (13%). However, this strong trend was not confirmed in the following year.All in all, the study underlines deficiency in proper NAS disclosure and reporting which might be observed also in the case of transparency reports. All findings of this study may be another argument for regulators to address the problem of NAS in more detail starting from their advice on a NAS taxonomy which might be used then as a point of reference. It would be also beneficial for researchers exploring the NAS aspect and, thus, may enhance data and results comparability between studies. Additional disclosure requirements like NAS provided to PIEs or a recurring or non-recurring character of NAS would also support the better understanding and evaluation of the consequences of the EU audit reform.

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“…Een betrouwbare accountantsverklaring kan zorgen in de samenleving over de financiële gezondheid van financiële instellingen verminderen (o.a. Commissie De Wit, 2010;Autoriteit Financiële Markten, 2010, 2012Majoor, 2012;Van Nieuw Amerongen & Quadackers, 2012).…”

Section: Probleemstellingunclassified

Verplichte kantoorroulatie in de financiële sector

Boonzaaijer¹,

Lecq²,

Veldhuizen³

2014

MAB

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De Nederlandse wetgever geeft voor OOB’s een nieuwe regel van verplichte accountantskantoorroulatie na iedere periode van tien jaar, die van kracht wordt op 1 januari 2016. Dit artikel verkent de concurrentie-effecten van de maatregel en de implicaties daarvan voor de prijs en kwaliteit van OOB-controlediensten voor cliënten in de Nederlandse financiële sector. In sommige scenario’s ontstaan allocatieproblemen waardoor niet alle cliënten kunnen worden bediend. Oligopoliemodellen indiceren dat verplichte kantoorroulatie kan leiden tot minimale servicedifferentiatie en daarmee tot lagere kwaliteit van controlediensten voor veel controlecliënten. De mededinging loopt gevaar en naar verwachting zullen prijzen stijgen.

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The Interdependence between the Structure of the Audit Market and the Quality of Audited Financial Statements: The Case of Non-Audit Services

Cited by 5 publications

References 176 publications

Audit Regulations, Audit Market Structure, and Financial Reporting Quality

Audit Regulations, Audit Market Structure, and Financial Reporting Quality

The Audit Reform and Non-Audit Services in the Light of the Big-4 Transparency Reports – the EU Perspective

Verplichte kantoorroulatie in de financiële sector

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