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Yoonseok Zang - One of the best experts on this subject based on the ideXlab platform.
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audit Market Concentration and audit quality
Social Science Research Network, 2009Co-Authors: Sanjay Kallapur, Srinivasan Sankaraguruswamy, Yoonseok ZangAbstract:Policymakers and regulators have been concerned about the impact of audit Market Concentration resulting from decline in the number of audit firms due to mergers and the demise of Arthur Andersen. In this paper we find a positive association between audit Market Concentration (Herfindahl index) at the MSA level and audit quality (measured by discretionary accruals and the Dechow-Dichev (2002) measure of accrual quality). We control for fixed year effects, therefore our results are unlikely to be affected by the increase in Concentration due to Andersen’s demise contemporaneous with an increase in audit quality because of regulatory measures such as SOX. Our results are robust to alternative Concentration and audit quality measures, and several sensitivity tests attempting to rule out omitted variables correlated with client firms’ MSA location or attributes of clients and auditors. Our results are also robust to controls for endogeneity between audit Market Concentration and audit quality. Our evidence therefore supports the Government Accountability Office (2003, 2008) conclusions that increased audit Market Concentration is not currently a cause for concern.
Paul N Michas - One of the best experts on this subject based on the ideXlab platform.
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audit Market Concentration audit fees and audit quality a cross country analysis of complex audit clients
Journal of Accounting and Public Policy, 2019Co-Authors: Joshua L Gunn, Brett S Kawada, Paul N MichasAbstract:Abstract Regulators around the world are concerned about the potentially harmful effects of high audit Market Concentration on audit pricing and quality. However, results in the overall literature have failed to reach consensus on this issue. We contribute to this debate by arguing that the audit Market is segmented and that Concentration in the Big 4 segment of the Market leads to higher audit pricing. Accordingly, our analyses use international data and focus on Concentration within the Big 4 group of firms across countries. We find that audit fees are increasing in our Concentration measure for clients where the barriers to entry by competing auditors are higher, as proxied by client size, international operations, and IFRS use. Finally, we find evidence that audit quality is decreasing in Big 4 Market Concentration for these types of engagements. This indicates a wealth transfer from shareholders to audit firms when auditor Concentration is high because these complex clients are charged more, but receive audits that are of lower quality.
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does audit Market Concentration harm the quality of audited earnings evidence from audit Markets in 42 countries
Contemporary Accounting Research, 2013Co-Authors: Jere R Francis, Paul N Michas, Scott E SeaveyAbstract:Audit regulators around the world have expressed concern over Market dominance by Big 4 accounting firms and the potential adverse effect it may have on the quality of audited financial statements. We use cross-country variation in the audit Market structure of 42 countries to examine two separate aspects of Big 4 dominance: (1) Big 4 Market Concentration as a group relative to non–Big 4 auditors; and (2) Concentration within the Big 4 group in which one or more of the Big 4 firms is dominant relative to the other Big 4 firms. We find that in countries where the Big 4 (as a group) conduct more listed company audits, both Big 4 and non–Big 4 clients have higher quality audited earnings compared to clients in countries with smaller Big 4 Market shares. In contrast, in countries where there is a greater Concentration within the Big 4 group, we find that Big 4 clients have lower quality audited earnings compared to countries with more evenly distributed Market shares among the Big 4. Thus Concentration within the Big 4 group appears to be detrimental to audit quality in a country and of legitimate concern to regulators and policymakers. However, Big 4 dominance per se does not appear to harm audit quality and is in fact associated with higher earnings quality, after controlling for other country characteristics that potentially affect earnings quality.
Sanjay Kallapur - One of the best experts on this subject based on the ideXlab platform.
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audit Market Concentration and audit quality
Social Science Research Network, 2009Co-Authors: Sanjay Kallapur, Srinivasan Sankaraguruswamy, Yoonseok ZangAbstract:Policymakers and regulators have been concerned about the impact of audit Market Concentration resulting from decline in the number of audit firms due to mergers and the demise of Arthur Andersen. In this paper we find a positive association between audit Market Concentration (Herfindahl index) at the MSA level and audit quality (measured by discretionary accruals and the Dechow-Dichev (2002) measure of accrual quality). We control for fixed year effects, therefore our results are unlikely to be affected by the increase in Concentration due to Andersen’s demise contemporaneous with an increase in audit quality because of regulatory measures such as SOX. Our results are robust to alternative Concentration and audit quality measures, and several sensitivity tests attempting to rule out omitted variables correlated with client firms’ MSA location or attributes of clients and auditors. Our results are also robust to controls for endogeneity between audit Market Concentration and audit quality. Our evidence therefore supports the Government Accountability Office (2003, 2008) conclusions that increased audit Market Concentration is not currently a cause for concern.
Erin Trish - One of the best experts on this subject based on the ideXlab platform.
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do health insurance and hospital Market Concentration influence hospital patients experience of care
Health Services Research, 2019Co-Authors: Caroline Hanson, Bradley Herring, Erin TrishAbstract:Objective To examine the effects of insurance and hospital Market Concentration on hospital patients' experience of care, as hospitals may compete on quality for favorable insurance contracts. Data sources/study setting Secondary data for 2008-2015 on patient experience from Hospital Compare's patient survey data, hospital characteristics from the American Hospital Association (AHA) Annual Survey, and insurance Market characteristics from HealthLeaders-InterStudy. Study design Hospital/year-level regressions predict each hospital's patient experience measure as a function of insurance and hospital Market Concentration and hospital fixed effects. The model is identified by longitudinal variation in insurance and hospital Concentration. Data collection/extraction methods Hospital/year-level data from Hospital Compare and the AHA merged by Market/year to insurance and hospital Concentration measures. Principal findings Changes in patient satisfaction are positively associated with increases in insurance Concentration and negatively associated with increases in hospital Concentration. Moving from a Market with 20th percentile insurance Concentration and 80th percentile hospital Concentration to a Market with 80th percentile insurance Concentration and 20th percentile hospital Concentration increases the share of patients that rated the hospital highly from 66.9 percent (95% CI: 66.5-67.2 percent) to 67.9 percent (95% CI: 67.5-68.3 percent) and the share of patients that definitely recommend the hospital from 69.7 percent (95% CI: 69.4-70.0 percent) to 70.8 percent (95% CI: 70.5-71.2 percent). The relationship for insurance Concentration is stronger in more concentrated hospital Markets, while the relationship for hospital Concentration is stronger in less concentrated hospital Markets. Conclusions These findings add to the evidence on the harms of hospital consolidation but suggest that insurer consolidation may improve patient experience.
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How do health insurer Market Concentration and bargaining power with hospitals affect health insurance premiums
Journal of health economics, 2015Co-Authors: Erin Trish, Bradley HerringAbstract:The US health insurance industry is highly concentrated, and health insurance premiums are high and rising rapidly. Policymakers have focused on the possible link between the two, leading to ACA provisions to increase insurer competition. However, while Market power may enable insurers to include higher profit margins in their premiums, it may also result in stronger bargaining leverage with hospitals to negotiate lower payment rates to partially offset these higher premiums. We empirically examine the relationship between employer-sponsored fully-insured health insurance premiums and the level of Concentration in local insurer and hospital Markets using the nationally-representative 2006–2011 KFF/HRET Employer Health Benefits Survey. We exploit a unique feature of employer-sponsored insurance, in which self-insured employers purchase only administrative services from managed care organizations, to disentangle these different effects on insurer Concentration by constructing one Concentration measure representing fully-insured plans’ transactions with employers and the other Concentration measure representing insurers’ bargaining with hospitals. As expected, we find that premiums are indeed higher for plans sold in Markets with higher levels of Concentration relevant to insurer transactions with employers, lower for plans in Markets with higher levels of insurer Concentration relevant to insurer bargaining with hospitals, and higher for plans in Markets with higher levels of hospital Market Concentration.
Bradley Herring - One of the best experts on this subject based on the ideXlab platform.
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do health insurance and hospital Market Concentration influence hospital patients experience of care
Health Services Research, 2019Co-Authors: Caroline Hanson, Bradley Herring, Erin TrishAbstract:Objective To examine the effects of insurance and hospital Market Concentration on hospital patients' experience of care, as hospitals may compete on quality for favorable insurance contracts. Data sources/study setting Secondary data for 2008-2015 on patient experience from Hospital Compare's patient survey data, hospital characteristics from the American Hospital Association (AHA) Annual Survey, and insurance Market characteristics from HealthLeaders-InterStudy. Study design Hospital/year-level regressions predict each hospital's patient experience measure as a function of insurance and hospital Market Concentration and hospital fixed effects. The model is identified by longitudinal variation in insurance and hospital Concentration. Data collection/extraction methods Hospital/year-level data from Hospital Compare and the AHA merged by Market/year to insurance and hospital Concentration measures. Principal findings Changes in patient satisfaction are positively associated with increases in insurance Concentration and negatively associated with increases in hospital Concentration. Moving from a Market with 20th percentile insurance Concentration and 80th percentile hospital Concentration to a Market with 80th percentile insurance Concentration and 20th percentile hospital Concentration increases the share of patients that rated the hospital highly from 66.9 percent (95% CI: 66.5-67.2 percent) to 67.9 percent (95% CI: 67.5-68.3 percent) and the share of patients that definitely recommend the hospital from 69.7 percent (95% CI: 69.4-70.0 percent) to 70.8 percent (95% CI: 70.5-71.2 percent). The relationship for insurance Concentration is stronger in more concentrated hospital Markets, while the relationship for hospital Concentration is stronger in less concentrated hospital Markets. Conclusions These findings add to the evidence on the harms of hospital consolidation but suggest that insurer consolidation may improve patient experience.
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How do health insurer Market Concentration and bargaining power with hospitals affect health insurance premiums
Journal of health economics, 2015Co-Authors: Erin Trish, Bradley HerringAbstract:The US health insurance industry is highly concentrated, and health insurance premiums are high and rising rapidly. Policymakers have focused on the possible link between the two, leading to ACA provisions to increase insurer competition. However, while Market power may enable insurers to include higher profit margins in their premiums, it may also result in stronger bargaining leverage with hospitals to negotiate lower payment rates to partially offset these higher premiums. We empirically examine the relationship between employer-sponsored fully-insured health insurance premiums and the level of Concentration in local insurer and hospital Markets using the nationally-representative 2006–2011 KFF/HRET Employer Health Benefits Survey. We exploit a unique feature of employer-sponsored insurance, in which self-insured employers purchase only administrative services from managed care organizations, to disentangle these different effects on insurer Concentration by constructing one Concentration measure representing fully-insured plans’ transactions with employers and the other Concentration measure representing insurers’ bargaining with hospitals. As expected, we find that premiums are indeed higher for plans sold in Markets with higher levels of Concentration relevant to insurer transactions with employers, lower for plans in Markets with higher levels of insurer Concentration relevant to insurer bargaining with hospitals, and higher for plans in Markets with higher levels of hospital Market Concentration.