Unintended consequences of Big 4 auditor office-level industry specialisation

Q4 Economics, Econometrics and Finance

International Journal of Accounting, Auditing and Performance Evaluation Pub Date : 2018-04-13 DOI:10.1504/IJAAPE.2018.10012073

Sharad Asthana, Rachana Kalelkar, K. Raman

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引用次数: 1

Abstract

The Big 4 audit firms currently dominate the US audit market. We investigate whether the extent of a Big 4 local office's dependence on industry specialist clients impacts audit effort/earnings quality for the office's specialist as well as non-specialist clients. Our findings suggest that greater dependence on specialist clients is associated with higher audit effort/earnings quality for specialist clients but also with lower audit effort/earnings quality for the office's non-specialist clients. Our results hold when we propensity-match specialist and non-specialist clients to control for client characteristics as a possible confounding explanation. Our study is important, because it: 1) contributes to prior research that is largely silent on whether cross-sectional variations in reputation for industry-expertise are associated with variations in audit quality (DeFond and Zhang, 2014); 2) suggests that, it would be appropriate for PCAOB inspectors to focus on non-specialist clients at audit offices with greater dependence on specialist clients as an area representing higher risk of lower audit effort/quality.

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四大审计事务所级别行业专业化的意外后果

四大审计事务所目前主导着美国审计市场。我们调查了四大会计师事务所当地办事处对行业专业客户的依赖程度是否会影响其专业客户和非专业客户的审计工作/盈余质量。我们的研究结果表明，对专业客户的更大依赖与专业客户更高的审计工作/盈余质量相关，但也与事务所非专业客户更低的审计工作/盈余质量相关。当我们倾向匹配专家和非专业客户以控制客户特征作为可能的混淆解释时，我们的结果成立。我们的研究很重要，因为它:1)有助于先前的研究，这些研究在很大程度上对行业专业知识声誉的横截面变化是否与审计质量的变化有关保持沉默(DeFond和Zhang, 2014);2)建议PCAOB检查员将重点放在对专业客户依赖程度较高的审计办公室的非专业客户上，作为审计工作/质量下降的高风险领域。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

International Journal of Accounting, Auditing and Performance Evaluation Economics, Econometrics and Finance-Finance

CiteScore

0.70

自引率

0.00%

发文量

期刊介绍： IJAAPE publishes original scholarly papers across the whole spectrum of: financial accounting, managerial accounting, accounting education, auditing, taxation, public sector accounting, capital market and accounting, accounting information systems, performance evaluation, corporate governance, ethics, and financial management. All methodologies, such as analytical, empirical, behavioural, surveys, and case studies are welcome. IJAAPE encourages contributions especially from emerging markets and economies in transition and studies whose results are applicable across nation states or capable of being adapted to the different accounting and business environments.