Please use this identifier to cite or link to this item:
http://hdl.handle.net/20.500.11861/10519
Title: | Audit reporting of Big 4 versus non-Big 4 auditors: The case of ex-andersen clients |
Authors: | Dr. LAI Kam Wah |
Issue Date: | 2013 |
Source: | The International Journal of Accounting, 2013, vol. 48(4), pp. 495-524. |
Journal: | The International Journal of Accounting |
Abstract: | This paper examines audit reporting of Big 4 auditors versus non-Big 4 auditors for ex-Andersen clients and other clients. It suggests that ex-Andersen clients are more risky than other clients and are able to exert more influence than other clients on non-Big 4 auditors because they are larger in size than other non-Big 4 auditees. In addition, Big 4 auditors are more risk-averse and able to withstand clients' pressure than non-Big 4 auditors. The results show that Big 4 auditors are more likely than non-Big 4 auditors to issue going-concern opinions to ex-Andersen clients or restrict the level of discretionary accruals of those clients compared with other clients. Further, ex-Andersen clients of Big 4 auditors would have had a lower likelihood of receiving going-concern opinions or higher levels of discretionary accruals had reporting practices for other clients been applied. Ex-Andersen clients of non-Big 4 auditors would have had a higher likelihood of going-concern opinions or lower levels of discretionary accruals. Hence, the suggestion to reduce the Big 4 concentration in the audit market by allowing non-Big 4 firms a larger market share should be viewed prudently. Overall, these results are consistent with the suggestion that litigation risk and client pressure are important factors in audit |
Type: | Peer Reviewed Journal Article |
URI: | http://hdl.handle.net/20.500.11861/10519 |
ISSN: | 0020-7063 |
DOI: | https://doi.org/10.1016/j.intacc.2013.10.001 |
Appears in Collections: | Accounting - Publication |
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