Transaction costs and competition among audit firms in local markets

• 成果类型: Article
• 署名作者: Chu, Ling; Simunic, Dan A.; Ye, Minlei; Zhang, Ping
• 署名单位: Wilfrid Laurier University; University of British Columbia; University of Toronto
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2017.11.004
• 发表日期: 2018
• 关键词: industry expertise; QUALITY; fees; INDEPENDENCE; specialization; Reputations; services

摘要

We develop a measure to capture an, audit firm's competitive position in a local audit market based on the transaction costs of changing audit firms included in DeAngelo's (1981) multi-period audit pricing model. Our competition measure reflects the size difference between the largest audit firm in a market specified by client industry at the city level and the other audit firms operating in that market. We find that audit fees of a client decrease as this size difference increases. This result suggests that smaller audit firms charge lower audit fees because of their competitive disadvantage to the local largest firm. (C) 2017 Elsevier B.V. All rights reserved.