Auditor Style and Financial Statement Comparability
The term "audit style" is used to characterize the unique set of internal working rules of each Big 4 audit firm for the implementation of auditing standards and the enforcement of GAAP within their clienteles. Audit style implies that two companies audited by the same Big 4 auditor, subje...
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Published in | The Accounting review Vol. 89; no. 2; pp. 605 - 633 |
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Main Authors | , , |
Format | Journal Article |
Language | English |
Published |
Sarasota
American Accounting Association
01.03.2014
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Subjects | |
Online Access | Get full text |
ISSN | 0001-4826 1558-7967 |
DOI | 10.2308/accr-50642 |
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Summary: | The term "audit style" is used to characterize the unique set of internal working rules of each Big 4 audit firm for the implementation of auditing standards and the enforcement of GAAP within their clienteles. Audit style implies that two companies audited by the same Big 4 auditor, subject to the same audit style, are more likely to have comparable earnings than two firms audited by two different Big 4 firms with different styles. By comparable we mean that two firms in the same industry and year will have a more similar accruals and earnings structure. For a sample of U.S. companies for the period 1987 to 2011, we find evidence consistent with audit style increasing the comparability of reported earnings within a Big 4 auditor's clientele. |
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Bibliography: | SourceType-Scholarly Journals-1 ObjectType-Feature-1 content type line 14 ObjectType-Article-2 content type line 23 |
ISSN: | 0001-4826 1558-7967 |
DOI: | 10.2308/accr-50642 |