Does a Lack of Choice Lead to Lower Quality? Evidence from Auditor Competition and Client Restatements Academic Article uri icon


  • SUMMARY: We examine the relationship between auditor competition and the likelihood of financial restatements that occur as a result of failures in the application of generally accepted accounting principles (GAAP). Policy makers and audit market participants have expressed concern that the current level of auditor competition is low, resulting in a negative impact on audit quality. However, we find that restatements are more likely to occur in metropolitan statistical areas (MSAs) that have higher auditor competition. The association between audit market competition and restatements is statistically and economically significant. Our finding of a positive relationship between the likelihood of restatement and audit market competition is relevant to the ongoing debate regarding audit quality and the concentration of audit markets.

published proceedings

  • AUDITING: A Journal of Practice & Theory

author list (cited authors)

  • Newton, N. J., Wang, D., & Wilkins, M. S.

citation count

  • 132

complete list of authors

  • Newton, Nathan J||Wang, Dechun||Wilkins, Michael S

publication date

  • August 2013