Audit Market Dynamics and Auditors’ Remuneration of Listed Companies in East Africa (Published)
This study of companies listed on the stock exchanges in Tanzania, Kenya, Rwanda and Uganda has uncovered oligopolistic audit market structure. A total of 78 listed companies (74% of population) was analysed using audit fees’ data from 2013-2017. The study revealed that Big4 had a statistically positive influence on the audit fees paid by the listed companies. Non_Big4 as a bloc had a negative influence as some of the firms experienced reduction in audit fees after taking over from Big4. The Herfindahl-Hirschman Index (HHI) was 0.94 while Concentration Ratio (CR4 – clients) which measures client market concentration of the Big4 was 86% and CR4- audit fees was much higher at 96% with PwC and KPMG the top two. Only 5% of variation in audit fees could be attributed to variation in stock exchange. Audit fees increased by a compound annual growth rate of 8% but Non_Big4 remain marginalized and forced into fee discounting to retain the few clients.
Keywords: Audit Fees, Audit Market, Big-4, Competitiveness, Concentration