Regulatory oversight and auditor market share

Daniel Aobdia and Nemit Shroff

Journal of Accounting and Economics, 2017, vol. 63, issue 2, 262-287

Abstract: 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.

Keywords: Auditing; PCAOB; Regulation; Assurance; Financial reporting (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (31)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaecon:v:63:y:2017:i:2:p:262-287

DOI: 10.1016/j.jacceco.2017.03.001

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