Abstract In this paper, auditor concentration in the United States is measured directly using actual audit revenues of public accounting firms. Direct measurement can reduce the bias that is generally present in concentration ratios that are based on surrogates for audit fees and yields measures that can be compared more reliably with ratios for other industries. Direct measures also can be used to make more reliable international comparisons of auditor concentration. Concentration measures for the years 1983 through 1987 that were computed from revenues of the 28 largest CPA firms indicate that the U.S. market for audit services is quite concentrated. Nonetheless, the ratios reported in this study are lower than the ratios reported in most of the prior studies on concentration that relied on various surrogates for audit fees.
Tomczyk et al. (Fri,) studied this question.