Prior research provides mixed evidence about whether sufficient audit market competition exists and whether competition impairs or improves audit quality. A major impediment to this stream of research is the unobservable nature of the bidding process by which auditors compete for clients. In...

Audit markets are generally characterised as concentrated markets as the result of mergers and acquisitions among audit firms. Audit scandals around the world have raised concerns about whether concentration in the market for audit services has an adverse impact on competition and audit quality....