IDEAS home Printed from
   My bibliography  Save this article

Information Asymmetry and Competitive Bidding in Auditing


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


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

    Download full text from publisher

    File URL:
    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 are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Zein, Nicole & Simons, Dirk, 2008. "Kosten aus einer asymmetrischen Informationsverteilung zwischen Abschlusspr├╝fer und Mandant," Papers 08-34, Sonderforschungsbreich 504.

    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


    Access and download statistics


    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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press) or (Christopher F. Baum). General contact details of provider: .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.