Market Concentration of Audit Services Provided to Public-Interest Entities: Empirical Evidence from the Czech Republic

Richard Stiebal () and Michal Šindelář ()
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Richard Stiebal: Prague University of Economics and Business
Michal Šindelář: Prague University of Economics and Business

A chapter in Eurasian Business and Economics Perspectives, 2022, pp 157-170 from Springer

Abstract: Abstract This chapter examines market concentration of audit services in the Czech Republic derived exclusively from audit fees for public-interest entities audits. The opportunity to analyze the audit market while taking into account solely public-interest entities came up with Regulation (EU) No 537/2014. The analysis is based on transparency reports for the years 2017–2020 and comprises 93 auditor-year entries. The analytical tools used include concentration ratio and Herfindahl-Hirschman index (HHI). The data show that Big4, albeit providing audit services to only 64% of public-interest entities, obtained a total of 96% audit fees. HHI values ranged from 2389 to 2570. PricewaterhouseCoopers (PwC) can be perceived as the current market leader, having obtained 32% of audit fees in the year 2020. Throughout the period under investigation, the number of audit firms which provided audit services to at least one public-interest entity dropped from 28 to 18 firms. The data also show that the Czech audit market has not undergone any significant changes throughout the last 10 years and therefore remains highly concentrated. Finally, it was found that Czech, German, and Swiss audit markets are very similar in terms of market concentration levels and the impact of Big4.

Keywords: Audit fees; Auditor concentration; Big4; Concentration ratios; Public-interest entities (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:eurchp:978-3-031-15531-4_10

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DOI: 10.1007/978-3-031-15531-4_10

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