Influence of Banks on Company Auditor Choice: The Case of Japan

Abstract

The purpose of the paper is to examine the auditor services market in Japan in 2000. We used a sample of 1,485 companies listed on the Tokyo Stock Exchange. We found that auditor mix within the client base was dependent on the main bank. There was evidence that in some cases companies had a tendency to choose their main banks preferred auditor. We also found that the market was dominated by four audit firms: Shin Nihon, ChuoAoyama, Asahi and Tohmatsu. These four firms collectively audited 81% of the companies. There were reasonable levels of auditor choice for companies within each industry sector. One or more of the Big 4 firms had substantial market share in each industry sector.