The impact of audit market concentration on audit quality: evidence from Australia

This study investigates the relationship between audit market concentration and audit quality in Australia, with audit quality assessed through earnings management (discretionary accruals) and going concern opinions. Drawing on agency theory, the hypotheses are tested using data from publicly listed firms between 2010 and 2018. The results show that higher audit market concentration is positively associated with improved audit quality. This relationship holds after controlling for endogeneity and remains robust across sensitivity and robustness tests. The findings offer key insights for regulators, investors, scholars, corporate management, and auditors by underscoring the role of audit market structure in enhancing audit quality.