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Competition in Auditing: Evidence from Entry, Exit, and Market Share Mobility in Germany versus The Netherlands

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  • WILLEM F. J. BUIJINK
  • STEVEN J. MAIJOOR
  • ROGER H. G. MEUWISSEN

Abstract

This paper investigates the usefulness of a dynamic analysis of audit†market competition in terms of audit†market†share mobility, audit†firm entry, and audit†firm exit. These dynamic measures of market structure are compared between the more regulated German audit market and the more liberal Dutch audit market. Prior research on audit market structure has focused on static analyses in terms of seller concentration of single national audit markets. By using data on the number of auditors as the measure of audit†firm size, this paper covers all firms active in the two audit markets in the period 1970 to 1994. The results indicate that the more liberal Dutch audit market has the highest dynamic measures of market structure and the highest concentration. Hence, the results show that high concentration can go hand in hand with high†market†share mobility and high audit†firm entry and exit. The results for market†share mobility also hold for an analysis including only the largest audit firms. The paper therefore concludes, that compared with a static seller concentration analysis, an analysis of audit†market dynamics provides a better description of the degree of competition in audit markets.

Suggested Citation

  • Willem F. J. Buijink & Steven J. Maijoor & Roger H. G. Meuwissen, 1998. "Competition in Auditing: Evidence from Entry, Exit, and Market Share Mobility in Germany versus The Netherlands," Contemporary Accounting Research, John Wiley & Sons, vol. 15(3), pages 385-404, September.
    • Handle: RePEc:wly:coacre:v:15:y:1998:i:3:p:385-404
    DOI: 10.1111/j.1911-3846.1998.tb00565.x
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    3. Schelleman, C.C.M., 2001. "Determinants of the profitability of audit engagements : an empirical study," Research Memorandum 037, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
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    5. Müller, Raphael & Spengel, Christoph & Weck, Stefan, 2021. "How do investors value the publication of tax information? Evidence from the European public country-by-country reporting," ZEW Discussion Papers 21-077, ZEW - Leibniz Centre for European Economic Research.
    6. Dirk Simons & Nicole Zein, 2016. "Audit Market Segmentation -- The Impact of Mid-tier Firms on Competition," European Accounting Review, Taylor & Francis Journals, vol. 25(1), pages 131-154, May.
    7. DeFond, Mark & Zhang, Jieying, 2014. "A review of archival auditing research," Journal of Accounting and Economics, Elsevier, vol. 58(2), pages 275-326.
    8. Heuser, Simon & Quick, Reiner & Schmidt, Florian, 2015. "Die Anbieterkonzentration auf dem deutschen Prüfungsmarkt – Eine empirische Untersuchung der Jahre 2010-2013," Die Unternehmung - Swiss Journal of Business Research and Practice, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 69(1), pages 81-109.

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