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The role of the audit firm governance in enhancing audit market stability

The role of the audit firm governance in enhancing audit market stability

Herdan, Agnieszka ORCID: 0000-0002-6514-2021, Neri, Lorenzo ORCID: 0000-0001-6627-0386 and Russo, Antonella ORCID: 0000-0001-9376-1383 (2017) The role of the audit firm governance in enhancing audit market stability. [Working Paper] (Unpublished)

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Significant efforts have been made in recent years to improve the audit firm trustfully (IOSCO, 2009; EC, 2010; PCAOB, 2011, 2013; IAASB, 2013, 2014).

Starting from these first works on enhancing the corporate governance of Audit firm the Financial Reporting Council (FRC) and Institute of Chartered Accountants in England and Wales (ICAEW) published the Audit Firm Governance Code.

The Code supports firms in their objectives of performing high quality work that gives confidence to shareholders. The reputations that the audit firms have built upon their license to audit can improve if they are being seen as exemplars of best practice governance.

On the basis of these motivations, this study looks at whether or not, and if so, in the UK Market the corporate governance of the audit firms is correlated with the market share of audit firms in order to support the efforts of standard setters to improve the corporate governance of audit firms and to enrich the academic literature on this topic. From the analysis run for the period 2010-2015 we found that there is a significant and positive relationship between the market concentration (captured as fees percentage) the number of independent non - executive member in the Public Interest Committee INE_SIZE and the fact that audit companies belong to Big4 companies network.

Item Type: Working Paper
Uncontrolled Keywords: Audit Firm Concentration, Audit Market Share, Corporate Governance, Transparency
Subjects: H Social Sciences > HF Commerce > HF5601 Accounting
Faculty / School / Research Centre / Research Group: Faculty of Business
Faculty of Business > Department of Accounting & Finance
Last Modified: 18 May 2019 22:28

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