Regulating the Market for Audit Services: A Game Theoretic Approach
用博弈论模型分析强制轮换审计事务所制度如何影响审计方与被审计方的策略互动，发现短期或长期轮换可消除审计师怀疑受损风险，但短期轮换因信息摩擦导致审计费更低、检测风险更高。
We apply game theory to model how alternative mandatory audit firm rotation regimes can affect the strategic interaction between auditee and auditor firms, and analyze potential consequences on detection risk and impairment of auditor scepticism. The major results suggest that: (1) relative to an initial state with no rotation requirement but high probability for impaired auditor scepticism, imposing either short‐term or long‐term mandatory audit firm rotation will remove the threat to auditor scepticism and lead to higher audit fees and lower detection risk; (2) relative to long‐term mandatory audit firm rotation, imposing a short‐term rotation will lead to lower audit fees and higher detection risk, resulting from greater informational frictions. We further find that imposing supplementary regulatory instruments, such as increased regulatory scrutiny of the auditee and/or auditor, can be used to lower the detection risk and increase audit quality. We discuss implications of these findings for empirical research.