Seminario académico: "Audit perceived independence and audit market structure"

28 de Julio, 13:00 horas. Sala 504, torre 26.

Expone: Harold López y Claudio Bonilla.

The audit market is characterized by a mix of a small group of large firms and a big group of smaller audit firms. We build upon the model presented by Magee and Tseng (1990) to shed light over the audit market’s structure. In particular, we focus on the perceived reputational cost borne by auditors of agreeing with the manager about controversial accounting issues. We claim that when the perceived reputational cost depends on the relative weight of a specific client over the total revenues, larger audit firms can charge higher fees for the same audits and clients would be willing to pay due to the premium given by investors for audits perceived as more independent.