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This paper aims to offer insight into how strategies within the accounting profession, which has been becoming more global, might be changed by the recent outbreak of the Second Cold War between the West and the Rest of the World.

We explore the strategies of those who called themselves “Confucian accountants” in China, a country which has recently discouraged its state-owned enterprises from using the services of the Big 4. We do this by employing qualitative research methods, including reflexive photo interviews, in which Big-4 accountants, recognised as the most Westernised accounting actors in China, and Confucian accountants are asked to take and explain photographs representing their professional lives. Bourdieu’s notions of “economy of practices” and “vision-of-division strategy” are drawn upon to understand who the Confucian accountants are and what they do strategically in their pursuit of a higher revenue stream and improved social standing in the Chinese social space.

The homegrown Confucian accountants share cultural-cognitive characteristics with neighbouring social actors, such as their clients and government officials, who have been inculcated with Confucianism and the state’s cultural confidence policy in pursuit of a “socialist market economy with Chinese characteristics”. Those accountants try to enhance their social standing and revenue stream by strategically demonstrating their difference from Big-4 accountants. For this purpose, they wear Confucian clothes, have Confucian props in their office, employ Confucian phrases in their everyday conversations, use Confucian business cards and construct and maintain guanxi with government officials and clients.

This paper is the first attempt to explore Confucian accountants’ strategies for increasing their revenue and social standing at the start of the Second Cold War.

This study aims to examine the effects of the entry of foreign direct investments (FDIs) on the audit markets in developing countries (i.e. Egypt). There is a long-standing debate on the impact of FDIs on developing markets, but little is still known about the effect of FDI on national suppliers, such as audit firms.

This paper reports the results of a study that used qualitative research methods. It involves interviews with senior management teams of the Big 4 audit firms, to find out how these firms deal simultaneously with conflicting global and local influences. The interviews were complemented by the publicly available data on the firms’ websites as well as published reports related to the Egyptian economy and current investment regulations.

Drawing on the institutional theory, the findings suggest that an increased litigious environment, compliance with developed markets’ regulations, auditor regulatory sanctions and improved local accounting and auditing standards are highly significant consequences of foreign investment inflows. The findings indicate that more emphasis has been given to the quality of audit and auditors’ independence when auditing FDIs. Both audit regulators and audit firms in the domestic market pay higher attention to improving the quality of financial reports when FDIs have entered the market. More inspections and reviews for audit firms have been conducted, and local auditing and accounting standards have been revised to be in compliance with international standards.

Our results have important implications for investors, regulatory authorities and governments in relation to the development, implementation and enforcement of international financial reporting and auditing standards.

Policymakers and regulators in Egypt have responded to international pressure by revitalizing their local accounting and auditing standards and adopting international financial reporting and auditing standards. The authors identify strategies that have been adopted by audit firms to face the FDIs’ challenges.

The study examines the changes in audit market concentration, auditor choice and audit quality in Russia following International Financial Reporting Standards (IFRS) adoption. Scholars have called for further examination of the effects of IFRS adoption on auditors, with an emphasis on the importance of analyzing emerging markets that are characterized by enforcement challenges and lack of proper infrastructure. It focuses on a unique feature of Russian companies – dual audits under Russian Accounting Standards (RAS) and IFRS – and investigates changes in audit concentration and audit quality for the two audit markets.

The authors rely on the audited financial statements of Russian public companies and perform pre-/post-IFRS adoption estimation using a logit regression to ascertain whether public firms change auditors from local firms with limited IFRS expertise to those with global reputation, namely Big 4 audit firms. Further, they examine whether the change in audit market concentration post-2012 affects audit quality as proxied by companies' propensity to receive a modified audit opinion and discretionary accruals. Auditor attributes were hand-collected from audited financial statements and matched with financial variables from Datastream.

The IFRS audit market was dominated by the Big 4 audit firms prior to 2012, and there is strong evidence that audit market share (concentration) increases for IFRS reports but not for RAS reports. In addition, companies are more likely to choose a Big 4 audit firm for an RAS audit, conditional upon a Big 4 firm conducting the IFRS audit. The authors do not find evidence of decrease in the probability of audit firms issuing a modified audit opinion under either RAS or IFRS, indicating that, in the Russian setting, increased auditor concentration post-IFRS adoption does not lead to enhanced risk or decline in audit quality. Moreover, they find that discretionary accruals decline post-2012. Overall, the findings indicate that the concern of global regulators regarding audit market concentration is not justified.

The Russian reporting environment is unique and generally characterized by significant agency problems, and the study’s estimation sample is not large, compared to prior studies conducted predominantly in Western jurisdictions. Nevertheless, the authors shed light on the audit concentration phenomenon within emerging markets, for which empirical evidence is scarce. Future research could explore the impact of other capital market events and exogenous shocks, not limited to IFRS adoption, on the characteristics of Russia's audit market.

The IFRS reporting regime is commonly associated with enhanced reporting quality and improved information transparency among public companies. Yet, impairment of audit quality as a result of IFRS-driven increase in audit market share of Big 4 can potentially negate these capital market effects. This study shows that the concerns of global regulators are not valid and that audit quality does not change with increased share of Big 4 post-IFRS adoption.

Dual audits, whereby companies must prepare two sets of financial statements per the IFRS mandate, are not unique to Russia, and the evidence of IFRS reporting on the structural changes in the audit market and implications for audit quality under a dual regime is scarce. Accordingly, the study's findings are important and timely and are expected to aid regulators of countries that have announced or are contemplating the adoption of IFRS for public reporting purposes.

This rich descriptive study examines auditors' client risk assessment (i.e. “key audit matters”/critical audit matters) disclosures in expanded audit reports of 328 Financial Times Stock Exchange (FTSE) 350 companies. The study compares auditor-identified client risks with corporate risk disclosures identified in audit committee reports, in terms of number and type of risks. The research also compares variation in auditor-identified client risks between individual Big 4 audit firms. In addition, the study examines auditor ranking of their client risks disclosed.

The study manually content analyses disclosures in audit reports and audit committee reports of a sample of 328 FTSE-350 companies with 2015 year-ends.

Audit committees identify more risks than auditors (23% more risks). However, auditor-identified client risks and audit-committee-identified risks are similar (80% similar), as are auditor-identified client risks between the individual Big 4 audit firms. Only ten (3%) audit reports rank the importance of auditor-identified client risks.

Sample is restricted to one year, one jurisdiction, large-listed companies and companies audited by Big 4 auditors.

The study provides important insights for regulators, auditors and users of financial statements by identifying influences on disclosure of auditor-identified client risks.

The paper mobilises institutional theory to interpret the findings. The findings suggest that auditor-identified client risks in expanded audit reports may demonstrate mimetic behaviour in terms of similarity with audit-committee-identified risks and similarity between individual Big 4 audit firms. The study provides important insights for regulators, auditors and users of financial statements by identifying influences on disclosure of auditor-identified client risks.

COVID-19 has forced Big 4 firms to challenge existing management control arrangements and adapt their ways of working. Yet, we know little about how management control might be enacted in the future of the sustainable workplace. The objective of the study is to examine the patterns of management control change in the Big 4 accounting firms during the COVID-19 pandemic.

Adopting an exploratory qualitative research design, the authors draw on 42 interviews with directors and associates in the Big 4 professional services firms.

The findings reveal two pathways of management control change including alignment and displacement. The authors found that relatively minor adaptions to action and result controls were relied upon to respond to substantial cultural and personnel control changes.

The contributions are threefold: the authors take a temporal perspective to (1) unpack the changes to management control arrangements; (2) theorise the findings by developing a three-dimensional taxonomy of change pathways encompassing pace, scope and longevity of management control change and (3) contextualise management control arrangements in a hybrid work setting.

1. COVID-19 has forced Big 4 firms to challenge existing management control arrangements.

2. Literature has focused on traditional, onsite work settings and largely ignored change pathways.

3. The authors take a temporal perspective to unpack changes to management control arrangements.

4. Big 4 firms adapted to hybrid work with substantial changes to personnel and cultural controls.

5. The authors theorise the findings by developing a three-dimensional taxonomy of change pathways.

COVID-19 has forced Big 4 firms to challenge existing management control arrangements.

Literature has focused on traditional, onsite work settings and largely ignored change pathways.

The authors take a temporal perspective to unpack changes to management control arrangements.

Big 4 firms adapted to hybrid work with substantial changes to personnel and cultural controls.

The authors theorise the findings by developing a three-dimensional taxonomy of change pathways.

This study aims to investigate whether organizational complexity (hereafter firm complexity) increases audit report lag (ARL) in a unique environment of GCC countries.

The research study uses a panel data set of 6,084 firm-year observations of nonfinancial firms from GCC economies from 2009 to 2022. First, the study uses an ordinary least square estimator to examine the association of firm complexity with ARL. Second, for robustness purposes, the study applies the propensity score matching technique.

This research study finds that the firms’ complexity increases ARL. Supporting the argument that auditors respond to firm complexity with increased effort, the authors find a positive relation of firm complexity with ARL. This relationship is augmented by auditor change, auditors’ tenure, auditor-qualified opinion and adoption of IFRS. In addition, the authors also find that Big-4 and audit firm industry specialization curtail the positive impact of firm complexity on ARL.

Firms in the GCC have less time to complete their audit and complex firms are likelier to have bigger ARLs. This study provided evidence regarding the curtailing effect of audit quality in GCC. Our findings suggest policymakers and reformers choose improved audit quality to reduce the possibility of larger ARL.

This study enriches the scholarship by presenting a mechanism for reducing the ARL of complex firms through higher audit quality. This study contributes to agency theory by emphasizing audit quality’s important role in emerging markets.

The purpose of this paper is to accentuate whether audit quality or other variables matter for the performance of companies in Greece.

This study examines the effect of audit quality on firm performance using data of 75 companies listed in the Athens Exchange in Greece and covering the period 2018–2021. Panel data analysis is applied. The independent variables are audit quality, the size of firms, their age, leverage, liquidity and efficiency ratios. Seven alternative measures of performance are used, including, among others, return on assets and return on equity. Stock returns and risks are used too.

The results provide evidence of a positive relationship between financial performance and audit quality. The opposite is the case for stock returns and risk. On the other explanatory variables, age has a clearly negative relationship with financial performance. The opposite is the case for liquidity and efficiency. The size factor also has some sort of a positive correlation with financial performance, whereas the opposite correlation concerns the leverage ratio.

To the best of the authors’ knowledge, this is the first study to examine the relationship between audit quality and firm performance with data from Greece.

This study aims to examine the impact of intellectual capital (IC) and its three components (human, structural and relational capital) on corporation performance in the Chinese transportation industry. In addition, this study also investigates auditor characteristics (both Big-N and non-Big-N auditors) as a moderating role to examine the relationship between IC and corporate performance.

The data include 398 firm-year observations of transportation companies listed on the Shanghai and Shenzhen Stock Exchange from 2011 to 2020. Value-added intellectual coefficient (VAIC) model and its modified version (MVAIC) are applied to measure IC efficiency. Finally, the fixed effects regression analysis is used to mitigate the endogeneity issue. To investigate the moderating effect of auditor characteristics, the authors divide the samples based on the clients audited by Big-4 and non-Big-4 firms.

This study reveals that IC can enhance firm performance in China’s transportation sector. Overall, findings indicate that on the whole, IC has a positive and significant impact on corporation profitability and productivity. Human capital and physical and financial assets (capital employed) play highly important roles, but structural capital has no significant impact. The authors also found that auditor characteristics play an important moderating role in the connection between IC and corporate performance. For example, the positive association between IC and corporate performance is more pronounced when Big-4 auditors audit client firms. At the same time, the authors found a negative relationship between IC and firm performance when non-Big-4 auditors audit client firms.

Managers must understand that several components of IC have a total effect on corporate financial performance. Therefore, managers can dedicate more resources to such components based on the performance outcomes to emphasize their business strategies.

This study is the first empirical analysis of the impact of IC and its components on corporation performance in the transportation sector in China, an emerging market. Previous studies mainly focus on developed countries’ high technology and financial industries sectors but the impact of IC in transportation industry largely remains unknown. Thus, the present findings contribute to IC literature by revealing several underlying mechanisms by which the components of IC help achieve good firm performance.

This paper aims to examine the effects of the 2014 European regulatory reform on auditors’ activity, the audit outcome and the audit market, with a focus on the Spanish market.

The research is based on in-depth, semistructured interviews with partners of the main audit firms operating in the Spanish market. This qualitative approach provides a precise identification of the cause-effect relationships of the new measures introduced by the European audit regulation.

The findings indicate that, based on auditors’ opinions, the costs of the main regulatory changes outweigh the benefits. The European Union (EU) Audit Regulation imposes more demanding provisions, such as an extended auditor’s report, mandatory audit firm rotation, more banned nonaudit services and stricter quality controls, resulting in substantial side effects on audit activity and the audit market. This could undermine the objective of enhancing the quality of audit services.

To the best of the authors’ knowledge, this is the first study to analyze the effect of the 2014 EU regulatory reform on audit activity, audit market and audit outcome based on auditors’ perceptions. The findings may be of interest to academics, professionals and regulators alike, as they offer valuable insights for assessing the effectiveness of the new audit provisions. Additionally, the qualitative methodology used facilitates a causal analysis of the key elements introduced by the regulations, potentially paving the way for future research avenues.

This study aims to explore the use, effectiveness, motives and obstacles of analytical procedures (APs) used by auditors in Palestine, a context characterised by a pool of small and medium enterprises (SMEs), a limited skill set, poor quality of data, political uncertainty and a community-based business culture.

The study considers the audit market in Palestine using a sequential mixed-methods approach combining a questionnaire survey and a series of in-depth interviews. A total of 129 Big-4 and non-Big-4 auditors were surveyed.

The use of APs is driven by the auditor size (Big-4 vs non-Big-4) and the client size (large vs SMEs). Even though the use of APs has increased over the past decade, audit objectives, know-how, and personal, family and social connections among auditors and clients influence the quality of the audit process.

Small firms take advantage of the lack of audit governance in Palestine. Our findings suggest that the regulators should help bridge the knowledge-sharing programmes between the small and large audit firms to help improve audit quality.

Studies on audit quality, particularly using APs, in the context of politically unstable cases such as Palestine are limited. The study has implications for the use of APs in the case of SMEs to prepare for the technological revolution that will modernise audit procedures and quality soon.