Because mandatory audit firm rotation (MAR) limits the economic rents earned from a client, regulators regard MAR as a means to address the threat of impaired auditor independence. Moreover, regulators expect that MAR increases the dynamism of the audit market and decreases the market shares of...

For decades, legislators worldwide have been discussing the merits of regulating their national audit markets. In this debate, the focus has primarily been on the regulations' effects on incentives, both those of preparers of financial statements to report truthfully and those of auditors to...