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Auditorské služby v České republice pohledem analýzy tržní koncentrace (se zaměřením na auditory subjektů veřejného zájmu)
[Market Concentration of Audit Services in the Czech Republic: Empirical Evidence (Focusing on Auditors of Public Interest Entities)]

Author

Listed:
  • Michal Šindelář
  • Libuše Müllerová

Abstract

The aim of this paper is to analyze the market concentration of audit services in the Czech Republic and compare its results with the international research. The analysis is based on transparency reports for years 2011-2014. Auditors that in the reporting period carried out the statutory audit at some public interest entity are required to compile and publish the transparency report. Among other information, auditors are required to specify their total turnover split into turnover of audit fees and turnover of non-audit fees. Globally recognized Herfindahl-Hirschman index is selected as an appropriate analytical tool. Herfindahl-Hirschman index is complemented by indicators of market share (Current ratios) and the Lorenz curve which graphically displays the unequal distribution of the turnover on the market of audit services. These data show that in the period under investigation the firms forming Big4 obtained about 85% of audit fees. In the year 2014 the Big4 firms occupied 80% of total fees and 84% of audit fees. As a major player on the Czech market of audit services can be regarded two firms - Ernst & Young (EY) in the area of total fees and KPMG in the area of audit fees. The analysis clearly indicates a high level of market concentration of audit services in the Czech Republic. The high level of market concentration has its impacts on the audit quality and leads Authorities in the US and in the EU to the tightening of audit regulation.

Suggested Citation

  • Michal Šindelář & Libuše Müllerová, 2016. "Auditorské služby v České republice pohledem analýzy tržní koncentrace (se zaměřením na auditory subjektů veřejného zájmu) [Market Concentration of Audit Services in the Czech Republic: Empirical E," Politická ekonomie, Prague University of Economics and Business, vol. 2016(6), pages 730-746.
    • Handle: RePEc:prg:jnlpol:v:2016:y:2016:i:6:id:1106:p:730-746
    DOI: 10.18267/j.polek.1106
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    References listed on IDEAS

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    1. William J. Baumol & Robert D. Willig, 1981. "Fixed Costs, Sunk Costs, Entry Barriers, and Sustainability of Monopoly," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 96(3), pages 405-431.
    2. Watts, Ross L & Zimmerman, Jerold L, 1983. "Agency Problems, Auditing, and the Theory of the Firm: Some Evidence," Journal of Law and Economics, University of Chicago Press, vol. 26(3), pages 613-633, October.
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    More about this item

    Keywords

    audit fees; non-audit fees; market share; concentration of audit market; auditor´s independence; audit quality;
    All these keywords.

    JEL classification:

    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing

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