Audit business firms and the Colombian stock market

Authors

  • Julian Esteban Zamarra Londono Universidad de Antioquia
  • Belky Gutierrez Castaneda Universidad de Antioquía
  • Jose David Villegas Franco

DOI:

https://doi.org/10.15665/dem.v18i4.2320

Abstract

The objective of this study is to measure the concentration levels in the auditing business market in Colombia for the period 2010-2018, using the concentration index methodology allowing us to know the number and share of audit firms that make up the market, using the Hirschman-Herfindahl index, the n-firm concentration ratio, and Adelman’s number’s-equivalent index. Results indicate that the audit market for companies listed on the Colombian stock market is highly concentrated on the Big Four, preventing small firms from entering that market.

References

Abidin, S.; Beattie, V. & Goodacre, A. (2010) Audit Market Structure, Fees, and Choice in a Period of Structural Change: Evidence from the UK – 1998-2003. The British Accounting Review, 42(3), 187-206.

Adelman, M. A. (1969) Comment on the "H" Concentration Measure as a Numbers-Equivalent. The Review of Economics and Statistics, 51(1), 99-101.

Al-Attar, K. A. (2017) The Impact of Auditing on Stock Prices of Amman Stock Market’s Listed Companies. International Journal of Academic Research in Business and Social Sciences, 7(6), 210-220.

Almeida, J. & Almeida, C. (2009) Auditoria e earnings management: um estudo empíricos nas empresas abertas auditadas pelas big four e demais firmas de auditoria. Revista Contabilidade e Finanças, 20(50), 62-74.

AlQadasi, A. & Abidin, S. (2018) The effectiveness of internal corporate governance and audit quality: the role of ownership concentration – Malaysian evidence. Corporate Governance: The International Journal of Business in Society, 18(2), 233-253. DOI:10.1108/CG-02-2017-0043

Beattie, V. & Fearnley, S. (1994) The Changing Structure Of The Market For Audit Services In The UK - A Descriptive Study. The British Accounting Review, 24(4), 301-322.

Boone, J. P.; Khurana, I. K. & Raman, K. K. (2012) Audit Market Concentration and Auditor Tolerance for Earnings Management. Contemporary Accounting Research, 29(4), 1171-1203.

Braunbeck, G. (2010) Determinantes da qualidade das auditorias independentes no Brasil. Tese de doutorado (Programa de Pós-Graduação em Contabilidade – Universidade de São Paulo/USP).

Bueno, E. & Morcillo, P. (1993). Fundamentos de economía y organización industrial. Madrid: McGraw-Hill.

Cabán-García, M. T. & Cammak, S. E. (2011) Industry, and City-Level Audit Market Concentration. International Journal of Auditing, 15(1), 21-42.

Carrera, M. N.; Gutiérrez, I. & Carmona, S. (2005) Concentración en el mercado de auditoría en España: análisis empírico del período 1990-2000. Revista Española de Financiación y Contabilidad, 34(125), 423-457.

Carson, E.; Redmayne; N.B. & Liao, L. (2014) Audit Market Structure and Competition in Australia. Australian Accounting Review, 24(4), 298-312.

Caso, C.; Río, M. J. & Martínez, A. M. (2011) Los riesgos de concentración en el mercado de auditoría. Partida Doble, (236), 10-21.

Choi, J.H.; Kim, J.B.; Lee, Y. & Sunwoo, H.Y. (2017) Audit Market Concentration and Audit Fees: An International Investigation. Retrieved from SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2985877

Cuesta, T. (2014, noviembre 10) El mercado de auditoría en España. Análisis de su estructura y evolución. Retrieved from RiuNet repositorio UPV: https://riunet.upv.es/handle/10251/47156

Czerney, K.; Jang, D. & Omer, T. (2019) Client Deadline Concentration in Audit Offices and Audit Quality. Auditing: A Journal Of Practice & Theory, 38(4), 55-75. DOI:10.2308/ajpt-52386

Dantas, J.; Chaves, S.; de Araujo Sousa, G. & da Silva, E. (2012) Concentração de auditoria no mercado de capitais Brasileiro. Revista de Contabilidade e Organizações, 6(14), 4-21.

Dunn, K.; Kohlbeck, M. & Mayhew, B. W. (2011) The Impact of the Big 4 Consolidation on Audit Market Share Equality. Auditing: A Journal of Practice and Theory, 30(1), 49-73.

Eguasa, B.E. (2017) Audit Market Concentration and Audit Quality in Nigeria. IOSR Journal of Business and Management, 19(9), 01-09.

Eichenseher, J.W. & Danos, P. (1981) The Analysis of Industry-Specific Auditor Concentration: Towards an Explanatory Model. The Accounting Review, 56(3), 479-492.

Furió, E. & Alonso, M. (2008) Concentración económica. Algunas consideraciones sobre su naturaleza y medida. Boletín económico de ICE, 2947, 41-54.

García-Benau, M.A. & Novejarque, J. (2009) Europa quiere potenciar la competencia en el mercado de auditoría. Partida Doble, 207, 82-90.

Guimarães, F.G. & Dantas, J.A. (2015) Concentração do mercado de auditoria na indústria bancária brasileira. Revista Evidenciação Contábil & Finanças, 3(3), 84-103.

Huang, T.C.; Chang, H. & Chiou, J.R. (2016) Audit Market Concentration, Audit Fees, and Audit Quality: Evidence from China. Auditing: a journal of practice and theory, 35(2), 121-145.

Ishak, A.M.; Mansor, N. & Maruhun, E.N. (2013) Audit market concentration and auditor’s industry specialization. Procedia - Social and Behavioral Sciences, 91, 48-56.

Karim, A.K. (2010) Audit Pricing, Audit Concentration, and Big-4 Premium in Bangladesh. Retrieved from SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1613454

Le Vourc'h, J. & Morand, P. (2011, November 9) Final report. Study on the effects of the implementation of the acquis on statutory audits of annual and consolidated accounts including the consequences on the audit market. Retrieved from ESCP Europe: http://www.revizorska-komora.hr/pdf/IFAC-FEE/ESCP%20Europe_Final%20report%20ESCP%20Europe%20study%20111109.pdf

Mališ, S.S. & Brozović, M. (2015) Audit Market Concentration - Evidence from Croatia. Ekonomski Vjesnik / Econviews, 28(2), 339-356.

Manfredi, O. (2015, Julio 6) El mercado de Auditoría de cuentas en España y su concentración. Retrieved from RiuNet repositorio UPV: https://riunet.upv.es/handle/10251/53242

Martinez, A. & Reis, G. (2010) Rodízio de auditores e o gerenciamento de resultados. Congresso USP de Controladoria e Contabilidade-São Paulo: USP.

Moizer, P. & Turley, S. (1989) Changes in the Uk Market For Audit Services: 1972-1982. Journal of Business Finance & Accounting, 16(1), 41–53.

Mutiara, C. & Fitriany, F. (2019) The Impact of Audit Market Concentration on Audit Quality: Evidence from Indonesia. Journal Pengurusan, 57, 1-12.

Oxera. (2007) Ownership rules of audit firms and their consequences for audit market concentration. Retrieved from Oxera: https://www.oxera.com/wp-content/uploads/2018/03/Ownership-rules-of-audit-firms-1.pdf

Palmrose, Z.V. (1986) Audit Fees and Auditor Size: Further Evidence. Journal of Accounting Research, 24(1), 97-110.

Raza, A.; Wan, W. & Abdul, J. (2019) An explanatory review of audit market concentration and auditor workload in Malaysia. Accounting, 5(4), 135-144. DOI:10.5267/j.ac.2019.4.001

Rodríguez, P.I. & Ruiz-Barbadillo, E. (2013, septiembre 25-27) Análisis de la dinámica competitiva en el mercado de auditoría español. XVII Congreso AECA, 117a, 1-21.

Ruiz-Barbadillo, E. & Rodríguez, P. (2013) La naturaleza de la competencia en el mercado de auditoría: una evaluación de la literatura. Revista Galega de Economía, 22(1), 281-306.

Saglam, N. & Orhan, A. (2018) Audit Market Concentration in Turkey: An Empirical Study of the Relationship between the Audit Firm Characteristics. The Journal of Accounting and Finance, 9, 153-164.

Silva, S. (2010) Auditoria independente no Brasil: evolução de 1997 a 2008 e fatores que podem influenciar a escolha de um auditor pela empresa auditada. Dissertação (Mestrado) – Programa de Pós-Graduação em Controladoria e Contabilidade Universidade de São Paulo.

Simunic, D.A. (1980) The Pricing of Audit Services: Theory and Evidence. Journal of Accounting Research, 18(1), 161-190.

Steponavičiūtė, J. & Zvirblis, A. (2011) Main principles of the complex assessment of audit market concentration and audit services quality levels. Issues of Business and Law, 3, 20-33.

Toscano, J.A. (2011) Análisis del mercado de servicios de auditoría en México. Colección reportes técnicos de investigación, 2, 01-41.

Toscano, J.A. & García-Benau, M.A. (2011) Estrategias de las cuatro grandes firmas de auditoría en México. Revista Europea de Dirección y Economía de la Empresa, 20(1), 80-104.

Toscano, J.A.; García-Benau, M.A.; Montano, C.E. & Álvarez, C.L. (2014) El poder de mercado y la concentración económica en los servicios de auditoría financiera en el mundo. Revista Universo Contábil, 10(1), 145-165.

Vagner, A.; Luiz, C.; Hudson, A. & de Souza, A. (2018) O poder da reputação: evidências do efeito big four sobre a opinião do auditor. Revista Contemporânea de Contabilidade, 15(35), 3-31.

Velte, P. & Stiglbauer, M. (2012) Audit Market Concentration and Its Influence on Audit Quality. International Business Research, 5(11), 146-161.

Villardefrancos, M.D. & Rivera, Z. (2006) La auditoría como proceso de control: concepto y tipología. Ciencias de la Información, 37(2-3), 53-59.

Downloads

Published

2020-10-31

How to Cite

Zamarra Londono, J. E., Gutierrez Castaneda, B., & Villegas Franco, J. D. (2020). Audit business firms and the Colombian stock market. Dimensión Empresarial, 18(4). https://doi.org/10.15665/dem.v18i4.2320

Issue

Section

RESEARCH RESULTS ARTICLES