IDEAS home Printed from https://ideas.repec.org/a/oup/ecinqu/v43y2005i2p417-425.html
   My bibliography  Save this article

Information Asymmetry and Competitive Bidding in Auditing

Author

Listed:
  • F. Gerard Adams
  • Jean C. Bedard
  • Karla M. Johnstone

Abstract

This article finds that clients with greater risk of fraud are less likely to engage prospective auditors in competitive bidding, consistent with the theory that these companies seek to limit access to information that might reveal their high-risk status. In contrast, we find no support for the expectation that companies with higher agency costs will seek competitive auditor bids, due to the need for better monitoring. Our results also show that bidding competition is more likely when the bidding firm is not an industry specialist, when clients have more active corporate governance, and when there are difficulties with the predecessor auditor.(JEL D44, D82, M42) Copyright 2005, Oxford University Press.

Suggested Citation

  • F. Gerard Adams & Jean C. Bedard & Karla M. Johnstone, 2005. "Information Asymmetry and Competitive Bidding in Auditing," Economic Inquiry, Western Economic Association International, vol. 43(2), pages 417-425, April.
    • Handle: RePEc:oup:ecinqu:v:43:y:2005:i:2:p:417-425
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/ei/cbi028
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sellers, R. Drew & Fogarty, Timothy J. & Jadallah, Jadallah, 2020. "Has the new world order taught the big four to manage client portfolio risk? Examining extreme loss occurrences before and after Sarbanes Oxley," Advances in accounting, Elsevier, vol. 51(C).
    2. Ziqin Yu & Xiang Xiao, 2022. "Innovation information disclosure and stock price crash risk‐based supervision and insurance effect path analysis," Australian Economic Papers, Wiley Blackwell, vol. 61(3), pages 534-590, September.
    3. Zein, Nicole & Simons, Dirk, 2008. "Kosten aus einer asymmetrischen Informationsverteilung zwischen Abschlussprüfer und Mandant," Papers 08-34, Sonderforschungsbreich 504.
    4. Pengcheng Xiang & Fuyuan Jia & Xiaohui Li, 2018. "Critical Behavioral Risk Factors among Principal Participants in the Chinese Construction Industry," Sustainability, MDPI, vol. 10(9), pages 1-22, September.

    More about this item

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:ecinqu:v:43:y:2005:i:2:p:417-425. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://edirc.repec.org/data/weaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.