Certifier Competition and Audit Grades

39 Pages Posted: 13 May 2019

See all articles by Yuqing Zheng

Yuqing Zheng

University of Kentucky - College of Agriculture - Department of Agricultural Economics

Talia Bar

University of Connecticut - Department of Economics

Date Written: April 13, 2019

Abstract

Third party certification bodies audit companies to determine compliance with standards. We introduce a model of oligopoly competition between certification bodies, showing that a higher degree of certification body competition results in higher grades. We empirically test this hypothesis using panel data from the British Retail Consortium food program, a leading international food safety standard for food manufacturers, and find evidence that a higher degree of competition between certification bodies is associated with higher audit grades. Grades are lower the first time manufacturers certify, suggesting certification may improve food safety practices. Producers with multiple certified sites obtain higher grades.

Keywords: certification, standard, food safety, British Retail Consortium, audit grades

JEL Classification: L66, L15, L13, H89

Suggested Citation

Zheng, Yuqing and Bar, Talia R., Certifier Competition and Audit Grades (April 13, 2019). Available at SSRN: https://ssrn.com/abstract=3371279 or http://dx.doi.org/10.2139/ssrn.3371279

Yuqing Zheng

University of Kentucky - College of Agriculture - Department of Agricultural Economics ( email )

Lexington, KY 40546
United States

Talia R. Bar (Contact Author)

University of Connecticut - Department of Economics ( email )

365 Fairfield Way, U-1063
Storrs, CT 06269-1063
United States

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