Audit Market Concentration for Listed Entities in the European Union and the Impact Following the Latest Audit Reform

In 2014 the European Union (E.U.) released new directives with the aim of reforming the statutory audit market. One of the points addressed by this reform was the high market concentration, at least for public interest companies, and promoting competition within the market. Our paper seeks to examine the structure of the European Market for listed entities, before and after the E.U. Reform. The main purpose of our research is to analyze the market structure, the trends, the impact of the new mandatory requirements related to auditor rotation and the restrictions regarding the rendering of non-audit services has had on the audit market. The analysis focused on the exports, from Thomson Reuters Eikon, of listed companies, on the main markets, for all the countries which are E.U. members, for the period from 2012 to 2023. We collected the relevant data: auditor name and type, audit fees, audit related fees, also non audit fees to analyze the audit market structure, before and after the new audit directive, and the variations in the market regarding the fees for both audit and non-audit services. Our results showed that even though nonbig4 auditors managed to increase their market share, when comparing the total number of companies, they did not manage to increase their market share when it came to percentage of total audit fees. This could be explained to some extent by charging lower audit fees to increase the number of clients or by attracting smaller clients which have lower fees and thus a limited impact on the overall value of the market. When it comes to non-audit services Non-Big4 auditors managed to increase their market share. This could have compensated for the lower fees and could prove useful if maintained in the medium-too long term.