An economic analysis of competitive bidding for public sector audit engagements

Paul Beck, Russell M. Barefield

Research output: Contribution to journalArticlepeer-review

Abstract

This study presents and tests an equilibrium pricing model for a public sector audit engagement. The bidding model's predictive accuracy was evaluated by comparing its predictions to the actual bids for a public sector audit engagement and to the predictions of an OLS regression model. The results are that predicted bids exhibited considerable variability and that associated prediction errors were sensitive to the underlying cost parameters. While the bidding model provided reasonably accurate predictions for the entire group of firms, it systematically overestimated the winning (lowest) bid. Possible explanations for this result are advanced and empirical implications are discussed.

Original languageEnglish (US)
Pages (from-to)143-165
Number of pages23
JournalJournal of Accounting and Public Policy
Volume5
Issue number3
DOIs
StatePublished - Jan 1 1986

ASJC Scopus subject areas

  • Accounting
  • Sociology and Political Science

Fingerprint

Dive into the research topics of 'An economic analysis of competitive bidding for public sector audit engagements'. Together they form a unique fingerprint.

Cite this