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UK Auditor Concentration: A Descriptive Note

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  • Michael Peel

Abstract

This note describes supplier concentration in the UK market for audit services. It extends previous research, which has focused on listed markets, by examining auditor concentration ratios across all corporate (quoted, unquoted plc and private) sub-markets. Individual and combined Big Six supplier concentration (CR6) ratios are calculated with reference to the number of clients audited, corporate size and disclosed audit fees. Compared with previous studies, the analysis is based on a larger number (171,799) of corporate audits, and indicates that, inter alia, corporate size (across different sub-markets) is a key determinant of supplier concentration. However, variations are reported in relation to individual auditors, auditee size and corporate sub-sectors. Other key findings are that the CR6 ratio in the quoted market has continued to rise in recent years, from 72.3% in 1991 (Beattie and Fearnley, 1994) to 78.4% in 1994/95, and that the Big Six currently audit a substantial proportion (58.2%) of companies in the UK middle market, which they appear to be targeting, as the large auditee sub-sector becomes saturated, to increase market share.

Suggested Citation

  • Michael Peel, 1997. "UK Auditor Concentration: A Descriptive Note," Accounting and Business Research, Taylor & Francis Journals, vol. 27(4), pages 311-322.
    • Handle: RePEc:taf:acctbr:v:27:y:1997:i:4:p:311-322
    DOI: 10.1080/00014788.1997.9729557
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    References listed on IDEAS

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    1. DeAngelo, Linda Elizabeth, 1981. "Auditor size and audit quality," Journal of Accounting and Economics, Elsevier, vol. 3(3), pages 183-199, December.
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    Cited by:

    1. Abidin, Shamharir & Beattie, Vivien & Goodacre, Alan, 2010. "Audit market structure, fees and choice in a period of structural change: Evidence from the UK – 1998–2003," The British Accounting Review, Elsevier, vol. 42(3), pages 187-206.
    2. Sharad Asthana, 2017. "Diversification by the audit offices in the US and its impact on audit quality," Review of Quantitative Finance and Accounting, Springer, vol. 48(4), pages 1003-1030, May.
    3. Charles Piot, 2007. "Concentration Et Compétitivité Du Marché De L'Audit En France : Une Étude Longitudinale 1997-2003," Post-Print halshs-00534787, HAL.
    4. Antonella Russo & Lorenzo Neri, 2022. "The Role of the Audit Firm Governance in Enhancing Audit Market Stability," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 14(11), pages 1-8, November.
    5. Sharad Asthana, 2013. "Diversification By The Audit Office And Its Impact On Audit Quality," Working Papers 0152acc, College of Business, University of Texas at San Antonio.
    6. Mark A. Clatworthy & Michael J. Peel, 2007. "The Effect of Corporate Status on External Audit Fees: Evidence From the UK," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 34(1‐2), pages 169-201, January.
    7. Fabien Cerruti & Christelle Richard, 2008. "Qualité de l'audit et Satisfaction de l'audité : Chronique d'une Innovation Ordinaire," Post-Print halshs-00522438, HAL.

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