Can the Number of Auditors in a Market be Positively Associated with Auditors’ Pricing Power?

Abstract Book of the 8th International Conference on Future of Business, Management and Economics

Year: 2026

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Can the Number of Auditors in a Market be Positively Associated with Auditors’ Pricing Power?

Ling Chu, Dr. Ping Zhang

ABSTRACT:

In this paper we argue that a higher demand for audit services benefits larger auditors and that a greater supply of audit services harms smaller auditors. Based on positive empirical associations among the number of auditors in a given market, we expect that fees charged by larger auditors are positively associated with the number of auditors, while fees charged by smaller auditors are negatively associated with the number of auditors. Consistent with our expectations, we document that auditors ranked according to larger market shares in their respective markets charge higher fees if the number of auditors is higher, and that auditors reversely ranked according to their market share charge lower fees, if the number of auditors in their market is higher. Our results suggest that the number of auditors has a differential impact on the pricing power of auditors holding different sized positions in the same market.

Keywords: Auditor, Market, Service