We examine the effects of deregulation that introduced price competition in a municipal audit market. In 1993 Florida removed the competitive bidding restriction that prohibited disclosure of pricing information in the initial stages of auditor selection. This change led to significant shifts in the audit market from Big 6 firms toward established non‐Big 6 firms in the municipal market and reduced audit fees. If quality increases with auditor office experience in a given industry, then our results also suggest that the primary effect of introducing price competition was to make quality audits more affordable.
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Research Article| November 01 2005
The Introduction of Price Competition in a Municipal Audit Market
Kevan L. Jensen, Assistant Professor;
Online ISSN: 1558-7991
Print ISSN: 0278-0380
American Accounting Association
AUDITING: A Journal of Practice & Theory (2005) 24 (2): 137–152.
Kevan L. Jensen, Jeff L. Payne; The Introduction of Price Competition in a Municipal Audit Market. AUDITING: A Journal of Practice & Theory 1 November 2005; 24 (2): 137–152. https://doi.org/10.2308/aud.2005.24.2.137
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