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Audit market concentration and audit quality: A study of public-interest entities in Sweden between 2008-2016
Jönköping University, Jönköping International Business School, JIBS, Business Administration.
Jönköping University, Jönköping International Business School, JIBS, Business Administration.
2018 (English)Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

Background – The issue of audit market concentration has been on the radar for some time and there are expressed concerns regarding the consequence of a high concentration of audit firms on the market. A central matter in this case is whether the audit market concentration has an effect on the audit quality delivered which is reflected by divergent opinions among researchers.

Purpose - The purpose is to evaluate the relationship between audit market concentration and audit quality on selected firms currently listed on Stockholm NASDAQ for the time period 2008-2016. The purpose is angled from a shareholder perspective due to the nature of the audit as a tool to minimize the agency problem.

Method - The study takes a quantitative approach where panel data is gathered for 1114 firm- year observations. Audit fees are hand collected from Swedish public-interest entities to compute market concentration using the Herfindahl-Hirschman Index. Discretionary accruals are used as a proxy for audit quality and is measured with financial data through the residuals from the Modified Jones Model while controlling for operation performance. A Pearson correlation is run and a multiple linear regression model is computed to evaluate and interpret the suggested relationship.

Conclusion - The results indicate a high audit market concentration on Stockholm NASDAQ when benchmarking against values provided by the Swedish competition authority and the US Department of Justice. Regarding the relationship between audit market concentration and audit quality, no significant relationship can be identified.

Place, publisher, year, edition, pages
2018. , p. 55
Keywords [en]
Audit market concentration, audit quality, public-interest entities, regulation 537/2014
National Category
Business Administration
Identifiers
URN: urn:nbn:se:hj:diva-39648ISRN: JU-IHH-FÖA-2-20180561OAI: oai:DiVA.org:hj-39648DiVA, id: diva2:1211869
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Available from: 2018-06-01 Created: 2018-05-31 Last updated: 2018-06-01Bibliographically approved

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CiteExportLink to record
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Citation style
  • apa
  • harvard1
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
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