On the Political Decision of Audit Market Regulation: Empirical Evidence of Audit Firm Tenure and Maximum Durations within the European Union

After almost every economic crisis and corporate scandal, political actors announce the need for stricter regulatory measures financial markets companies, in an attempt to appease their voters defend agenda. Regarding latest international crisis, EU responded, among other things, with comprehensive regulation of European audit market. In context auditor rotation, after 17 June 2016, duration engagements should not exceed a maximum 10 years. this paper, we therefore investigate whether there is empirical evidence behind 10-year threshold—or it simply arbitrary? Our aim evaluate market reform by Union (EU) (Regulation No 537/2014 Directive, 2014/56/EU) related objective improving quality audits. Therefore, our article addresses most crucial element reform, implementation mandatory firm rotation public interest entities 537/2014, Article 17). Based on unique dataset 11,834 observations from all listed companies within between 2008 2017, provide first time discussion basis assessment interventions EU. Hence, compare new durations average tenure particular member states. Even where present only descriptive results, results at least indicate that “magic number” (years) could be more result process—i.e., consent institutions—rather than based. findings shall serve as starting point vast interdisciplinary research field.