Big 4 office size and audit quality

Accounting Review

Volumn 84, Issue 5, 2009, Pages 1521-1552

  Francis, Jere R ^a   Yu, Michael D ^b  

^a UNIVERSITY OF MISSOURI   (United States)

^b WASHINGTON STATE UNIVERSITY   (United States)

Author keywords

Accruals; Audit quality; Big 4 accounting firms; Earnings benchmarks; Earnings quality; Going concern audit reports

Indexed keywords

EID: 72149110354     PISSN: 00014826     EISSN: None     Source Type: Journal    
DOI: 10.2308/accr.2009.84.5.1521     Document Type: Article

References (45)

1. Altman, E. 1983. Corporate Financial Distress: A Complete Guide to Predicting, Avoiding, and Dealing with Bankruptcy. New York, NY: Wiley.
2. Ashbaugh, H., R. LaFond, and B. Mayhew. 2003. Do nonaudit services compromise auditor independence? Further evidence. The Accounting Review 78: 611-639.
3. Balsam, S., J. Krishnan, and J. S. Yang. 2003. Auditor industry specialization and earnings quality. Auditing: A Journal of Practice & Theory 22: 71-97.
4. Becker, C., M. DeFond, J. Jiambalvo, and K. R. Subramanyam. 1998. The effect of audit quality on earnings management. Contemporary Accounting Research 15: 1-24.
5. Becker, G. S. 1993. Human Capital. 3rd edition. Chicago, IL: University of Chicago Press.
6. Burgstahler, D., and I. Dichev. 1997. Earnings management to avoid earnings decreases and losses. Journal of Accounting and Economics 24: 99-126.
7. Carcello, J., R. Hermanson, and N. McGrath. 1992. Audit quality attributes: The perceptions of audit partners, preparers, and financial statement users. Auditing: A Journal of Practice & Theory 11: 1-15.
8. Carcello, J. D. Hermanson, and F. Huss. 1995. Temporal changes in bankruptcy-related reporting. Auditing: A Journal of Practice & Theory 14: 133-143.
9. Carey, P., and R. Simnett. 2006. Audit partner tenure and audit quality. The Accounting Review 81: 653-676.
10. Choi, J., F. Kim, J. Kim, and Y. Zang. 2007. Audit office size, audit quality and audit pricing. Working paper, Seoul National University, City University of Hong Kong, Hong Kong Polytechnic University, and Singapore Management University.
11. Craswell, A. T., D. J. Stokes, and J. Laughton. 2002. Auditor independence and fee dependence. Journal of Accounting and Economics 33: 253-275.
12. Danos, P., J. W. Eichenseher, and D. L. Holt. 1989. Specialized knowledge and its communication in auditing. Contemporary Accounting Research 6: 91-109.
13. DeAngelo, L. 1981. Auditor size and audit quality. Journal of Accounting and Economics 3: 183-199.
14. Dechow, P. M., R. Sloan, and A. Sweeney. 1995. Detecting earnings management. The Accounting Review 70: 193-225.
15. DeFond, M., and J. Jiambalvo. 1994. Debt covenant violation and manipulation of accruals. Journal of Accounting and Economics 17: 145-176.
16. DeFond, M. K. Raghunandan, and K. R. Subramanyam. 2002. Do non-audit service fees impair auditor independence? Evidence from going concern audit opinions. Journal of Accounting Research 40: 1247-1274.
17. Degeorge, F., J. Patel, and R. Zeckhauser. 1999. Earnings management to exceed thresholds. Journal of Business 72: 1-33.
18. Denis, D. J., and V. T. Mihov. 2003. The choice among bank debt, non-bank private debt, and public debt: Evidence from new corporate borrowings. Journal of Financial Economics 70: 3-28.
19. Doyle, J., G. Weili, and S. McVay. 2007. Accruals quality and internal control over financial reporting. The Accounting Review 82: 1141-1170.
20. Ferguson, A., J. Francis, and D. Stokes. 2003. The effects of firm-wide and office-level industry expertise on audit pricing. The Accounting Review 78: 429-448.
21. Francis, J. R., E. Maydew, and H. C. Sparks. 1999. The role of Big 6 auditors in the credible reporting of accruals. Auditing: A Journal of Practice & Theory 18: 17-34.
22. Francis, J. R. D. J. Stokes, and D. J. Anderson. 1999. City markets as a unit of analysis in audit research and the re-examination of Big 6 market shares. Abacus 35: 185-206.
23. Francis, J. R. K. R. Reichelt, and D. Wang. 2005. The pricing of national and city-specific reputations for industry expertise in the U. S. audit market. The Accounting Review 80: 113-136.
24. Francis, J. R. K. R. Reichelt, and D. Wang. 2006. National versus office-specific measures of auditor industry expertise and effects on client earnings quality. Working paper, University of Missouri, Louisiana State University, and University of Nebraska.
25. Frankel, R. M., M. F. Johnson, and K. K. Nelson. 2002. The relation between auditors' fees for nonaudit services and earnings management. The Accounting Review 77: 71-105.
26. Goldstein, H. 1995. Multilevel Statistical Models. London, U. K.: Edward Arnold; New York, NY: Halstead Press.
27. Greene, W. 2007. Econometric Analysis. 6th edition. Upper Saddle River, NJ: Prentice Hall.
28. Hopwood, W., J. McKeown, and J. Mutchler. 1994. Reexamination of auditor versus model accuracy within the context of the going-concern opinion decision. Contemporary Accounting Research 11: 295-310.
29. Hribar, P., and D. Nichols. 2007. The use of unsigned earnings quality measures in tests of earnings management. Journal of Accounting Research 44: 1017-1053.
30. Johnson, V., I. Khurana, and J. K. Reynolds. 2002. Audit firm tenure and the quality of accounting earnings. Contemporary Accounting Research 19: 637-660.
31. Jones, J. 1991. Earnings management during import relief investigations. Journal of Accounting Research 29: 193-228.
32. Kothari, S. P., A. J. Leone, and C. E. Wasley. 2005. Performance matched discretionary accrual measures. Journal of Accounting and Economics 39: 163-197.
33. Levitt, A. 1998. The numbers game. Speech delivered at New York University, Center for Law and Business, September 28. Available at: http://www.sec.gov/news/speech/speecharchive/1998/spch220.txt.
34. Matsumoto, D. A. 2002. Management's incentives to avoid negative earnings surprises. The Accounting Review 77: 483-514.
35. Menon, K., and D. Williams. 2004. Former audit partners and abnormal accruals. The Accounting Review 79: 1095-1118.
36. Mutchler, J., W. Hopwood, and J. McKeown. 1997. The influence of contrary information and mitigating factors in audit opinion decisions on bankrupt companies. Journal of Accounting Research 35: 295-310.
37. Newey, W. K., and K. West. 1987. A simple, positive semi-definite heteroscedasticity and autocorrelation consistent covariance matrix. Econometrica 55: 703-708.
38. Raghunandan, K., and D. Rama. 1995. Audit opinions for companies in financial distress: Before and after SAS No. 59. Auditing: A Journal of Practice & Theory 14: 50-63.
39. Reynolds, J. K., and J. R. Francis. 2000. Does size matter? The influence of large clients on officelevel auditor reporting decisions. Journal of Accounting and Economics 30: 375-400.
40. Rogers, W. H. 1993. Regression standard errors in clustered samples. Stata Technical Bulletin 13 (May) : 19-23.
41. Satava, D. 2003. The A to Z of keeping staff. Journal of Accountancy 195: 67-70.
42. Vera-Muñoz, S., J. Ho, and C. Chow. 2006. Enhancing knowledge sharing in public accounting firms. Accounting Horizons 20: 133-155.
43. Wallman, S. 1996. The future of accounting, Part III: Reliability and auditor independence. Accounting Horizons 10: 76-97.
44. Warfield, T., J. Wild, and K. Wild. 1995. Managerial ownership, accounting choices, and informativeness of earnings. Journal of Accounting and Economics 20: 61-91.
45. Wooldridge, J. M. 2002. Econometric Analysis of Cross-Section and Panel Data. Cambridge, MA: MIT Press.