The interdependence between market structure and the quality of audited reports : the case of non-audit services

Bleibtreu, Christopher; Stefani, Ulrike

The interdependence between market structure and the quality of audited reports : the case of non-audit services

Dateien

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Datum

2024

Open Access-Veröffentlichung

Open Access Hybrid

Sammlungen

Wirtschaftswissenschaften

Publikationstyp

Zeitschriftenartikel

Publikationsstatus

Published

Erschienen in

Review of Accounting Studies. Springer. 2024, 29(2), S. 1524-1574. ISSN 1380-6653. eISSN 1573-7136. Verfügbar unter: doi: 10.1007/s11142-022-09734-9

Zusammenfassung

This paper addresses the effects of a prohibition of providing non-audit services (NAS) to audit clients. By combining a strategic auditor–client game with a circular market-matching model that has an endogenous number of auditors, we take into account the interdependence between the auditors’ and clients’ incentives, the market structure, and the quality of audited reports. We show that the regulation’s effects depend on the preexisting audit market concentration and the types of blacklisted NAS. In sharp contrast to the effects that regulators desire, a prohibition of providing NAS to audit clients can further increase audit market concentration and decrease the quality of audited reports if the fees that auditors previously earned from providing the blacklisted NAS were relatively high, compared to the reduction in audit costs that result from spillovers. In contrast, a prohibition of the NAS that generate intense spillovers and low NAS fees can have the unexpected—but desired—effect of decreasing market concentration; however, reporting quality also decreases.

Fachgebiet (DDC)

330 Wirtschaft

Zitieren

ISO 690

BLEIBTREU, Christopher, Ulrike STEFANI, 2024. The interdependence between market structure and the quality of audited reports : the case of non-audit services. In: Review of Accounting Studies. Springer. 2024, 29(2), S. 1524-1574. ISSN 1380-6653. eISSN 1573-7136. Verfügbar unter: doi: 10.1007/s11142-022-09734-9

BibTex

@article{Bleibtreu2024-06inter-59498,
  year={2024},
  doi={10.1007/s11142-022-09734-9},
  title={The interdependence between market structure and the quality of audited reports : the case of non-audit services},
  number={2},
  volume={29},
  issn={1380-6653},
  journal={Review of Accounting Studies},
  pages={1524--1574},
  author={Bleibtreu, Christopher and Stefani, Ulrike}
}

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