Corruption and Audit Market Concentration: An International Investigation

• In Event: Audit Markets

Abstract

This paper examines the association between the corruption level of a country and audit market concentration. Using a sample from 78 countries over the 2003–2012 period, we document a positive association between corruption and Big 4 audit market concentration, consistent with the argument that firms in more corrupt countries are less concerned about sharing a Big 4 auditor with other firms in the same industry than firms in less corrupt countries. These results are robust to change analysis, to controlling for other factors that are likely to influence auditor choices, to an alternative measure of concentration, and to alternative restrictions on the sample.

Authors

• Lin-Hui Yu, National Taiwan University

• Rong-Ruey Duh, National Taiwan University

• Chunlai Ye, Texas A&M International University