Recent research suggests that Big 4 auditors do not provide higher audit quality than other auditors, after controlling for the endogenous choice of auditor. In this paper, we re-examine this issue using the incidence of accounting restatements as a measure of audit quality. Using a propensity score matching procedure similar to that used by recent research to control for clients? endogenous choice of auditor, we find that clients of Big 4 audit firms are less likely to subsequently issue an accounting restatement than are clients of other auditors. In additional tests, we find weak evidence that clients of Big 4 auditors are less likely to issue accounting restatements than are clients of Mid-tier auditors (Grant Thornton and BDO Seidman). Taken together, the evidence suggests that Big 4 auditors do perform higher quality audits.
Speaker: | Mr Dan Eshleman PhD Candidate, Louisiana State University |
When: |
3.30 pm - 5.00 pm |
Venue: | School of Accountancy [Map] Level 4, Meeting Room 4.1 |
Contact: | Office of the Dean Email: SOAR@smu.edu.sg |