On Auditing

Mere presence in audit market entails enormous fixed costs (to maintain competence and to cover liabilities). That being the case, I am not sure cutting back on clients is an option; cutting back would amount to digging one's own grave. In fact, the situation leads to a premium on size, which might explain the concentration of large firms in the audit profession and also the flight of smaller firms from auditing.

At some point, there is probably a flight from auditing, and the plausible  formal model might be that of catastrophe theory (a point of singularity at which firms switch out of auditing), or the models that were popular 

in the sixties and seventies in sociology to explain ":white flight" from urban areas in the US or in the US Army. However, I do not know of any such study. Perhaps the reason is the accountics fixation on regression:

such models do not lend themselves to regressions. And dynamic modeling has never been the strong suit of accountics.

Another possibility is the use of the kinds of actuarial-Game theoretic models that Karl Borch pioneered, but his untimely and premature passing deprived us all of his profound wisdom. 

In any case, "understanding" or "knowing" of the accounting phenomena has, to my  knowledge, has never been an objective of accountics research, which has been satisfied with mere  "explaining". That suits it because of its 

pretentions to a "scientific" attitude (Physics-envy).