Auditor Concentration in a Joint-Auditing Environment: The French Market 1997-2003

Posted: 6 Feb 2007

See all articles by Charles Piot

Charles Piot

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


Purpose - The French law uses joint-auditing as an audit quality device. This regulation also indirectly preserves market competition by reducing the domination of the large audit firms. However, concerns emerge about the effects of recent auditor mergers on the effectiveness of joint-auditing: the reduced number of audit suppliers may favour the development of too frequent joint-auditing collaborations, causing routine cross-reviews and interdependencies betweens co-auditors. Design/methodology - The market shares, individual performance, and joint-audit interconnections (attraction-repulsion indices) of the main audit networks in France are investigated for the year 1997 and again for the year 2003. Findings - Despite the concentration of the audit market for listed companies globally, descriptive market analyses suggest that competition in the audit market has not decreased: (1) the PricewaterhouseCoopers merger in 1998 did not produce any gain in market share to the newly-formed network; (2) the French member of Arthur Andersen suffered an effective erosion of its audit portfolio resulting from the infamous Enron case; and (3) some national audit networks have maintained significant market positions. Contrary to expectations, the increased concentration did not result in abnormally frequent collaborations between the main audit firms. Research limitations/implications - The joint-auditing interconnections are based on the number of common audit clients, and this approach does not take into account the different sizes of the auditees. Originality/value - This paper is an original approach of auditor concentration in a joint-auditing environment. To regulators, the results of this study suggest that joint-auditing can be utilised as a mechanism to preserve market competition and thus potentially maintaining audit quality.

Keywords: Joint-auditing, Auditor concentration, Market share, Big 6/4, France

JEL Classification: M40

Suggested Citation

Piot, Charles, Auditor Concentration in a Joint-Auditing Environment: The French Market 1997-2003. Managerial Auditing Journal, Vol. 22, No. 2, p. 161-176, Available at SSRN:

Charles Piot (Contact Author)

Univ. Grenoble Alpes ( email )

Grenoble Cedex 9, F-38040

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

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

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