Regulatory oversight and auditor market share
Author(s)Aobdia, Daniel; Shroff, Nemit
MetadataShow full item record
We examine whether auditor regulatory oversight affects the value of financial statement audits. Using the PCAOB international inspection program as a setting to generate within country variation in regulatory oversight, we find that non-U.S. auditors inspected by the PCAOB gain 4% to 6% market share from competing auditors after PCAOB inspection reports are made public. When inspection findings reveal that an auditor has many engagement-level deficiencies, market share gains following inspection reports are significantly smaller. Our evidence suggests that regulatory scrutiny increases the assurance value of an audit and highlights the role of public regulatory oversight in the audit market.
DepartmentMassachusetts Institute of Technology. Department of Economics; Sloan School of Management
Journal of Accounting and Economics
Aobdia, Daniel and Nemit Shroff. "Regulatory oversight and auditor market share." Journal of Accounting and Economics 63, 2-3 (April 2017): 262-287 © 2017 Elsevier B.V.
Author's final manuscript