This paper examines the influence of labor market power in the audit profession. Using a
dataset of online job postings, we confirm that audit offices in more concentrated labor
markets have greater labor market power and exercise it in the form of higher skill
requirements and greater required effort from their auditors, at similar or slightly lower
wages. We then show that client firms of audit offices in more concentrated labor markets are
less likely to restate their earnings and have lower absolute discretionary accruals. These …