A new paper published by the American Antitrust Institute raises the possibility of “deconcentrating reforms” within the Big Four accounting firms. The paper stems from the concern that the audit industry is too highly concentrated, as the Big Four currently audit approximately 80% of U.S. public companies.
The AAI notes that there is a growing concern that massive law suits brought by investors could run the Big Four out of business, which could have a severe impact on the market.
As a solution, the AAI suggests that Congress review the Big Four along with the financial institutions deemed “too big to fail.” The paper emphasizes the need to create incentives to foster competition in the audit industry before Congress addresses whether the Big Four should have limited liability.
