AUDIT MARKET CONCENTRATION IN THE BRAZILIAN BANKING INDUSTRY

The present study aimed to evaluate the audit market concentration in the Brazilian banking industry. To achieve this purpose, we evaluated the audit firm leader's market share (C-1) and the market share of the four largest audit firms (C-4). We also use Herfindahl-Hirschman Index (HHI) in our analysis. In our analysis, we use the audit firms market share measured by firms revenues. We also use, as proxies, total assets and financial intermediation revenues of 182 financial conglomerates and individual banking institutions from 2000 to 2014. Based on our tests, we conclude that: (i) it is possible the exercise of market power by the biggest audit firm, in accordance with Brazilian antitrust authorities parameters; (ii) the four largest audit firms can exert market power in a coordinated manner, as the criteria utilized by Brazilian antitrust authorities; (iii) the concentration of the audit market is defined as significant, according to European and the United States antitrust authorities and international agencies - World Bank and International Monetary Fund parameters; and (iv) the concentration of the audit market is more relevant among biggest banks.