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A Basic Quantification of the Competitive Implications of the Demise of Arthur Andersen

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  • Emilie Feldman

Abstract

Andersen’s exit from the already-concentrated market for auditing services is shown to have increased market concentration and audit fees. Changes in market concentration are found to be significantly related to changes in audit fees, suggesting that the structure-performance hypothesis is applicable to the post-Andersen accounting industry and that the “Final Four” accounting firms may have exercised market power in this environment. The paper concludes with a discussion of the implications of Andersen’s exit from the market. Copyright Springer Science+Business Media, LLC 2006

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  • Emilie Feldman, 2006. "A Basic Quantification of the Competitive Implications of the Demise of Arthur Andersen," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 29(3), pages 193-212, November.
    • Handle: RePEc:kap:revind:v:29:y:2006:i:3:p:193-212
    DOI: 10.1007/s11151-006-9117-5
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    References listed on IDEAS

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    1. Juan A. Toscano M. & Maria A. Garcia-Benau, 2014. "Structure and Nature of Competition in the Market for Financial Audit Services in Mexico," Journal of Business Administration Research, Journal of Business Administration Research, Sciedu Press, vol. 3(2), pages 1-10, October.
    2. Chu, Ling & Simunic, Dan A. & Ye, Minlei & Zhang, Ping, 2018. "Transaction costs and competition among audit firms in local markets," Journal of Accounting and Economics, Elsevier, vol. 65(1), pages 129-147.
    3. Joseph Gerakos & Chad Syverson, 2015. "Competition in the Audit Market: Policy Implications," Journal of Accounting Research, Wiley Blackwell, vol. 53(4), pages 725-775, September.
    4. 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.
    5. Bedard, Jean C. & Hoitash, Udi & Hoitash, Rani, 2008. "Audit pricing and internal control disclosures among non-accelerated filers," Research in Accounting Regulation, Elsevier, vol. 20(C), pages 103-126.
    6. Numan, Wieteke & Willekens, Marleen, 2012. "An empirical test of spatial competition in the audit market," Journal of Accounting and Economics, Elsevier, vol. 53(1), pages 450-465.
    7. Justyna Godawska & Małgorzata Kutera, 2021. "Changes in the Concentration of the Audit Services Market in the Context of Mandatory Auditor Rotation in Poland and the United Kingdom," European Research Studies Journal, European Research Studies Journal, vol. 0(3B), pages 372-385.
    8. Evans, Lawrance & Schwartz, Jeremy, 2014. "The effect of concentration and regulation on audit fees: An application of panel data techniques," Journal of Empirical Finance, Elsevier, vol. 27(C), pages 130-144.
    9. Fukukawa, Hironori & 福川, 裕徳 & Karube, Masaru & 軽部, 大, 2013. "Audit Firm Switch and Engagement Partner Continuance," IIR Working Paper 13-05, Institute of Innovation Research, Hitotsubashi University.

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