Profit Persistence in the US Audit Market

• 成果类型: Article
• 署名作者: Ciconte III, William A.; Kitto, Andrew R.
• 署名单位: University of Kansas; University of Massachusetts System; University of Massachusetts Amherst
• 刊物名称: JOURNAL OF ACCOUNTING RESEARCH
• ISSN/ISSBN: 0021-8456; 1475-679X
• DOI: 10.1111/1475-679X.70029
• 发表日期: 2026-05
• 页码: 633-679
• 关键词: audit firm competition; profit persistence; audit market concentration; Audit quality; industry specialization; nonaudit services; big 4; fees; QUALITY; firm; INDEPENDENCE; assessments; COMPETITION; EFFICIENCY

摘要

This study investigates the relation between audit competition, audit quality, and auditor labor hours. Using proprietary data on auditor realization rates, we construct new measures of competition based on theory predicting that abnormal profits will quickly disappear when competition is high but persist over multiple periods when competition is low. We find consistent evidence of persistent abnormal profits among U.S. Big 4 engagements and that individual offices earn persistent abnormal returns, suggesting that the market is not perfectly competitive. Examining the consequences of lower competition, we find that profit persistence is negatively related to audit hours and positively related to audit quality. Although we are cautious about inferring causality, our findings suggest that lower competition is associated with more efficient and effective audits.