IFRS Adoption in Europe and Audit Market Concentration

57 Pages Posted: 21 Feb 2014 Last revised: 10 Nov 2014

See all articles by Nhung Dinh

Nhung Dinh

University of Angers - Centre de Recherches Appliquées à la Gestion (CERAG)

Charles Piot

Univ. Grenoble Alpes; University of Angers - Centre de Recherches Appliquées à la Gestion (CERAG)

Date Written: October 22, 2014

Abstract

The switch to IFRS in Europe opens the opportunities to investigate the relationship between a drastic change in the complexity of financial reporting standards and the audit market dynamics. Following concerns that mandated IFRS may have increased the domination of the global audit firms, we investigate the relationship between audit market concentration and IFRS adoption in the European setting. Our evidence suggests that IFRS adoption is associated with an increase in auditor industry concentration on a cross-border perspective. This is consistent with the view that global audit networks reacted to an increase in accounting/audit complexity by seeking more industry expertise, and that this change in market dynamics is beyond legal jurisdictions. However, we do not find any positive relationship between IFRS adoption and auditor concentration or dominance at the country level. Overall, we conclude that the audit market competition does not seem to be affected by this major change in financial reporting standards.

Keywords: Auditor concentration, dominance, industry specialization, IFRS adoption, Europe

JEL Classification: M42, M48, L10

Suggested Citation

Dinh, Nhung and Piot, Charles, IFRS Adoption in Europe and Audit Market Concentration (October 22, 2014). Available at SSRN: https://ssrn.com/abstract=2398463 or http://dx.doi.org/10.2139/ssrn.2398463

Nhung Dinh (Contact Author)

University of Angers - Centre de Recherches Appliquées à la Gestion (CERAG) ( email )

GRENOBLE, 38000
France

Charles Piot

Univ. Grenoble Alpes ( email )

Grenoble Cedex 9, F-38040
France

University of Angers - Centre de Recherches Appliquées à la Gestion (CERAG)

150 rue de la Chimie, BP47
Grenoble Cedex 9, 38040
France

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