Conventional wisdom holds that joint audits would improve audit quality by enhancing audit evidence precision, because “Two heads are better than one,” and by enhancing auditor independence, because it is more expensive for a company to “bribe” two audit firms than one. Our paper...

This study investigates the effects of mandatory audit risk disclosure on audit quality, audit fees, and investment efficiency. We consider a two-period model wherein an auditor acquires private information about a company’s risk of material misstatement, thereby reducing the detection risk....

This paper derives the impacts of legal system characteristics and auditing standards on auditor behavior (audit quality), and analyzes the determination of optimal auditing standards under different legal regimes. Legal regimes are characterized by differences in the uncertainty concerning the...

The extant auditing literature documents an inconsistent relationship between audit fees and market concentration. In this paper, we argue that the impact of market concentration on audit fees is auditor and auditee specific. Based on the fact that the audit services to an auditee are generally...

We revisit the notion of audit quality and investigate how audit quality is related to auditor size and the structure of the auditing industry. We discuss a model of audit firm competition where both audit quality and audit firm size are endogenous. Based on this model, we predict how certain...