Big N Auditors and Audit Quality: New Evidence from Quasi-Experiments

Jiang, John; Wang, Isabel Yanyan; Wang, K. Philip

doi:10.2308/accr-52106

Cited by 134 publications

(37 citation statements)

References 51 publications

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“…Recent studies have attempted to address these concerns using clever settings in which audit firm selection is quasi‐exogenously determined (Che et al ; Jiang et al ).…”

mentioning

confidence: 99%

When Are Audit Firms Sued for Financial Reporting Failures and What Are the Lawsuit Outcomes?

Lennox

2020

Contemporary Accting Res

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We examine how often audit firms are sued in a large sample of accounting lawsuits that allege financial reporting failures. We find an insignificant relation between the likelihood of auditor litigation and restatements, but the likelihood of auditor litigation is strongly related to the types of alleged accounting deficiencies. We also find that the auditor's type influences the probability of the auditor being sued and the size of the payouts from auditor and nonauditor defendants. In particular, the Big N firms are approximately 7 percent less likely than non–Big N firms to be named as co‐defendants, and the auditor's contribution to the plaintiff's payout is significantly larger when a Big N firm is sued. Overall, our findings suggest that auditors are rarely blamed when there are allegations of financial reporting failures, but the types of accounting deficiencies and the auditor's type significantly influence the probability of the audit firm being sued and the outcomes of the lawsuits.

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“…Recent studies have attempted to address these concerns using clever settings in which audit firm selection is quasi‐exogenously determined (Che et al ; Jiang et al ).…”

mentioning

confidence: 99%

When Are Audit Firms Sued for Financial Reporting Failures and What Are the Lawsuit Outcomes?

Lennox

2020

Contemporary Accting Res

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“…According to John (Xuefeng) Jiang and al (2019) the companies audit quality improves after the transition to the audit big 4, the mergers and acquisitions done between non big 4 does not have an impact on the quality of audit. In addition, their analysis shows that the improvement of audit quality is due to the general competence of big 4 auditors more than to their specific expertise in the sector.…”

Section: The Competence and Independence Of The Auditormentioning

confidence: 99%

Impact of the External Audit Quality and Corporate Governance on the Tunisian Company’ Financial Performance of Before and After the 2011 Revolution

Nafti¹

2019

ijafr

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The latest financial scandals have challenged the accounting systems adopted and the quality of external audit and corporate governance.The purpose of the study is to analyze the impact of the determinants of the external audit quality and corporate governance on the Tunisian company's financial performance before and after the 2011 revolution.Using a sample of 31 companies listed on the Tunis Stock Exchange this impact is tested for a period of eight years, divided into two periods. The first period spans from 2007 to 2010, before the revolution, and the second period spans from 2013 to 2016, after the revolution.The results show that after the revolution, a significant relationship exists between the financial performance of the companies and their size and indebtedness, whereas before the revolution, the relationship was significant between financial performance of the companies and the existence of an audit committee and managerial property. The behavior of Tunisian companies changed after the revolution and the 2011 revolution allowed the various parties who were against good governance to negatively affect investor confidence in auditors and the performance of the company. It's a crisis of the crisis.

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“…Unlike our within-audit-firm comparison, both of these studies compare the audit performance or audit effort across different audit firms. Another related study, Jiang, Wang and Wang (2018), uses the setting of Big N auditors' acquisitions of non-Big N auditors in the United States, and compares the audit quality of client companies audited by Big-N auditors (due to the acquisition) with that of client companies audited by non-Big N auditors. In contrast, our comparison is between treated and control clients in the same audit firm, and our evidence suggests that removing organizational boundaries facilitates knowledge transfer.…”

Section: 1related Literature and Contributionmentioning

confidence: 99%

Knowledge Transfer in Audit Firms

Kothari

Xiao

et al. 2018

SSRN Journal

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We utilize the setting of the rapid audit market consolidation in China over the past twenty years to study knowledge transfer in audit firms. We employ a difference-indifference approach and examine whether industry-specific knowledge transfer occurs after a merger of two audit firms with different levels of expertise in a particular industry. For clients in an industry audited by both merging audit firms, those audited by the less competent audit firm in that industry belong to the treatment group, while all other clients belong to the control group. Consistent with the existence of knowledge transfer, we find an economically significant improvement in audit quality (as reflected in a reduction in misstatements and an increase in modified audit opinions) for the treatment group relative to the control group in the same merged audit firm.

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Big N Auditors and Audit Quality: New Evidence from Quasi-Experiments

Cited by 134 publications

References 51 publications

When Are Audit Firms Sued for Financial Reporting Failures and What Are the Lawsuit Outcomes?

When Are Audit Firms Sued for Financial Reporting Failures and What Are the Lawsuit Outcomes?

Impact of the External Audit Quality and Corporate Governance on the Tunisian Company’ Financial Performance of Before and After the 2011 Revolution

Knowledge Transfer in Audit Firms

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