Big N Audit Quality Effect: New Evidence on Audit Hours and Audit Adjustments

Jasmine Zhang, Xiao-Jun Zhang, W. Zhou
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引用次数: 1

Abstract

Using a unique data set on audits of Chinese companies, this paper examines the Big N audit quality effect by comparing the audit processes of Big N and non-Big N auditors. We document that Big N audits involve significantly more audit hours with higher per-hour fees but do not result in more audit adjustments. In fact, Big N audits have a significantly higher percentage of cases with no audit adjustments at all. Big N audits also have fewer subsequent restatements. Collectively, this evidence suggests that Big N firms play a significant disciplinary role by performing more time-consuming and costly audits. Anticipating such stringent audits, clients of the Big N increase the quality of their reports ex ante, resulting in fewer audit adjustments and higher-quality financial reports.
大N审计质量效应:审计时数与审计调整的新证据
本文利用中国企业审计的独特数据集,通过比较大N和非大N审计师的审计过程,考察了大N审计质量效应。我们记录了Big N审计涉及到更多的审计时间和更高的每小时费用,但没有导致更多的审计调整。事实上,Big N审计中根本没有审计调整的案例比例要高得多。大N审计的后续重述也较少。总的来说,这些证据表明,大N事务所通过进行更耗时、更昂贵的审计,在纪律方面发挥了重要作用。Big N的客户预期会有如此严格的审计,因此提前提高了报告的质量,从而减少了审计调整,提高了财务报告的质量。
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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