This paper provides empirical evidence on audit quality in Kazakhstan as measured by audit tenure and the frequency of issuing modified opinions. In addition, an overview of audit institutions of Kazakhstan and an ana...This paper provides empirical evidence on audit quality in Kazakhstan as measured by audit tenure and the frequency of issuing modified opinions. In addition, an overview of audit institutions of Kazakhstan and an analysis of the current audit market for public companies are offered. This paper also sheds light upon the potential independence problems resulting in low audit quality and current barriers to audit researches in Kazakhstan. Consistent with the findings of extant researches on audit quality and the general perceptions of investors, two hypotheses were developed, i.e., the audits performed by Big 4 audit firms in Kazakhstan also have higher quality than non-Big 4 audit firms in terms of audit tenure and the frequency of issuing modified opinions. The result confirms the hypothesis that Big 4 audit firms provide higher audit quality than smaller local firms in association with audit tenure instead of in relation to the frequency of issuing modified opinions. The result indicates that Big 4 audit firms may not be as independent as they will be in a highly litigious market. Therefore, an independent inspection should be regularly implemented according to the audit law, and the inspection report should be publicized by Chamber of Auditors （COA）1. If this is not practical due to the lack of qualified inspectors, a peer review may be an altemative to implement the quality control policy immediately. To the author＇s best knowledge, this is the first audit quality research in countries of the Commonwealth of Independence States （CIS）.展开更多
This study examines the effect of audit quality （AQ） on the earnings response coefficient （ERC） based on a sample of 1,884 firm-year observations comprising 471 firms listed on the Bursa Malaysia from 2007 to 2010...This study examines the effect of audit quality （AQ） on the earnings response coefficient （ERC） based on a sample of 1,884 firm-year observations comprising 471 firms listed on the Bursa Malaysia from 2007 to 2010. This study tests whether AQ affects ERC after controlling the established determinants of ERC： beta, growth, earnings persistence, and size. Using reverse regression, the study confirms that Big 4 is significant and positive to ERC. Auditor switching from non-Big 4 to Big 4 indicates the same results; however, the switching of auditors among Big 4 is not significant. The study thus provides systematic and comprehensive additional evidence on the effect of AQ via the measurement of Big 4; and auditor switching from non-Big 4 to Big 4 and switching among Big 4 on ERC. This is an important contribution to the literature but especially so given that the evidence comes from Malaysia, an emerging economy, whereas the existing empirical literature relates mainly to the developed countries.展开更多
We examine whether supply shocks in the audit partner labor market induce clients to switch audit partners.We argue that audit partners in their early careers(i.e.,junior partners)charge low audit fees to attract clie...We examine whether supply shocks in the audit partner labor market induce clients to switch audit partners.We argue that audit partners in their early careers(i.e.,junior partners)charge low audit fees to attract clients,which induces client firms to switch from senior partners to junior partners when there are more junior partners available.Utilizing the Big4 localization policy,we find that Big4 clients are more likely to replace senior auditors with junior auditors to cut costs after the policy.Furthermore,the results are mainly driven by clients who are charged high fees.Our empirical evidence enriches the understanding of auditor choice determinants and informs the ongoing debates surrounding new regulations for Big4 firms in China.展开更多
We examine the association between auditor choice and the accruals patterns of Chinese listed firms that cross-list in Hong Kong.Our evidence suggests that the clients of Big 4 auditors report lower unsigned discretio...We examine the association between auditor choice and the accruals patterns of Chinese listed firms that cross-list in Hong Kong.Our evidence suggests that the clients of Big 4 auditors report lower unsigned discretionary accruals relative to the clients of non-Big 4 auditors.Further,we find that cross-listed firms with non-Big 4 auditors are more likely to understate their earnings and experience larger reversals of accruals in the future than cross-listed firms with Big 4 auditors.These findings suggest that Big 4 auditors play a meaningful role in improving earnings quality for cross-listed firms,which helps to explain why crosslisted firms have higher earnings quality than their domestic counterparts,as documented in the previous literature.展开更多
文摘This paper provides empirical evidence on audit quality in Kazakhstan as measured by audit tenure and the frequency of issuing modified opinions. In addition, an overview of audit institutions of Kazakhstan and an analysis of the current audit market for public companies are offered. This paper also sheds light upon the potential independence problems resulting in low audit quality and current barriers to audit researches in Kazakhstan. Consistent with the findings of extant researches on audit quality and the general perceptions of investors, two hypotheses were developed, i.e., the audits performed by Big 4 audit firms in Kazakhstan also have higher quality than non-Big 4 audit firms in terms of audit tenure and the frequency of issuing modified opinions. The result confirms the hypothesis that Big 4 audit firms provide higher audit quality than smaller local firms in association with audit tenure instead of in relation to the frequency of issuing modified opinions. The result indicates that Big 4 audit firms may not be as independent as they will be in a highly litigious market. Therefore, an independent inspection should be regularly implemented according to the audit law, and the inspection report should be publicized by Chamber of Auditors （COA）1. If this is not practical due to the lack of qualified inspectors, a peer review may be an altemative to implement the quality control policy immediately. To the author＇s best knowledge, this is the first audit quality research in countries of the Commonwealth of Independence States （CIS）.
文摘This study examines the effect of audit quality （AQ） on the earnings response coefficient （ERC） based on a sample of 1,884 firm-year observations comprising 471 firms listed on the Bursa Malaysia from 2007 to 2010. This study tests whether AQ affects ERC after controlling the established determinants of ERC： beta, growth, earnings persistence, and size. Using reverse regression, the study confirms that Big 4 is significant and positive to ERC. Auditor switching from non-Big 4 to Big 4 indicates the same results; however, the switching of auditors among Big 4 is not significant. The study thus provides systematic and comprehensive additional evidence on the effect of AQ via the measurement of Big 4; and auditor switching from non-Big 4 to Big 4 and switching among Big 4 on ERC. This is an important contribution to the literature but especially so given that the evidence comes from Malaysia, an emerging economy, whereas the existing empirical literature relates mainly to the developed countries.
文摘We examine whether supply shocks in the audit partner labor market induce clients to switch audit partners.We argue that audit partners in their early careers(i.e.,junior partners)charge low audit fees to attract clients,which induces client firms to switch from senior partners to junior partners when there are more junior partners available.Utilizing the Big4 localization policy,we find that Big4 clients are more likely to replace senior auditors with junior auditors to cut costs after the policy.Furthermore,the results are mainly driven by clients who are charged high fees.Our empirical evidence enriches the understanding of auditor choice determinants and informs the ongoing debates surrounding new regulations for Big4 firms in China.
基金The National Natural Science Foundation of China supported this study(ProjectNos.70802067,71002026,and 70772080)
文摘We examine the association between auditor choice and the accruals patterns of Chinese listed firms that cross-list in Hong Kong.Our evidence suggests that the clients of Big 4 auditors report lower unsigned discretionary accruals relative to the clients of non-Big 4 auditors.Further,we find that cross-listed firms with non-Big 4 auditors are more likely to understate their earnings and experience larger reversals of accruals in the future than cross-listed firms with Big 4 auditors.These findings suggest that Big 4 auditors play a meaningful role in improving earnings quality for cross-listed firms,which helps to explain why crosslisted firms have higher earnings quality than their domestic counterparts,as documented in the previous literature.
