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In response to the users of financial statements’ need for better communication value from audit reports, auditors are required to expand the format and content of their reports. This paper aims to investigate the heterogeneity of key audit matters (KAM) for big4 audit firms.

Using a pool of 273 year-observations from the Omani capital market for the period 2016–2019, a quantile regression approach is adopted to achieve this purpose because it can provide a broader picture of this heterogeneity.

The results indicate that all types of big4 audit firms are associated with lower numbers of KAM. However, each big4 audit firm reports these KAM differently. Also, the results indicate heterogeneity in the number of KAM among the partners of each firm. Specifically, partners in some big4 audit firms show a significant association with fewer KAM while others are insignificant. Some partners of Ernst and Young show a positive association with a higher number of KAM. Overall, the results confirm the heterogeneity among auditors in styling their KAM disclosure.

There are crucial implications for various policymakers. This paper is the first to analyse KAM aspects at the partner level and use quantile regression to detect the effect of audit firms on KAM.

This paper aims to investigate whether the choice for a Big4-affiliated local audit firm affects the capital structure of listed companies in Indonesia, a fast-growing emerging country that is characterized by high information asymmetry and low litigation risk. A unique characteristic of the Indonesian audit environment is that Big4 auditors can only enter the market indirectly through affiliation with a local audit firm.

A sample of Indonesian listed companies between 2008 and 2015 is used to investigate this relation using ordinary least squares (OLS). To address the concern that the choice for Big4-affiliated auditors might reflect client characteristics, the authors also perform OLS on a matched sample, using both propensity-score and entropy-balance matching.

Across all three samples, the authors document that companies audited by a Big4-affiliated local audit firm display lower debt ratios. The authors find no such effect for affiliation with second-tier audit firms. Surprisingly, they find that the negative effect of Big4 affiliation is increasing in client size.

This study provides evidence of the consequences of hiring Big4 auditors on the perceived information asymmetry by financial markets under extreme conditions: in an environment characterized by low litigation risk and where Big4 auditors can operate only indirectly through affiliation.

The results of this study are of interest to policymakers, managers and financial stakeholders in emerging countries where external financing is important yet difficult to obtain because of severe information asymmetry. Hiring a Big4 auditor, even only through affiliation, might reduce perceived information asymmetry and increase the access to external equity financing.

To the best of the authors’ knowledge, this study is the first to provide evidence of the effect of Big4 auditors on their clients’ capital structure when they can operate only indirectly through affiliation with a local auditor.

This paper aims to examine whether a private firm’s demand for a Big4 auditor is influenced by the auditor choice of its main supplier, customer and competitor. The authors rely on institutional theory to explain this stakeholders’ influence. The authors also examine whether the extent to which the firm’s board of directors engages in networking moderates this influence.

Questionnaire data are combined with archival data of 210 Belgian private firms with a statutory audit requirement. Logistic regression analysis is applied to examine to what extent firms follow their main competitor, customer and supplier in hiring a Big4 auditor.

The results reveal a positive association between the firm’s choice of a Big4 auditor and its main supplier being audited by a Big4 auditor, supporting the conformance effect (isomorphism) toward suppliers as hypothesized by institutional theory. The extent of board networking, however, seems to weaken this effect. Toward competitors, a divergence effect instead of a conformance effect is found, which indicates the existence of competitive differentiation regarding auditor choice.

While prior studies mainly focus on the agency relationships between shareholders, debtholders and managers to explain auditor choice, this study also takes into account the firm’s other main stakeholders by relying on institutional theory. Both the conformance effect toward suppliers as well as the divergence effect toward competitors provide interesting additional perspectives on why auditors are demanded, leading to interesting future research opportunities.

This paper fulfills an identified need to consider additional theories in explaining audit outcomes.

The purpose of this paper is to study audit pricing and the Big4 fee premium in Belgium. While a number of studies have already explored these issues, the Belgian audit market provides an interesting setting to gain an additional insight into the pricing of audit services for many reasons (e.g. audit market concentration in Belgium is much lower than in other countries, the Belgian audit market mainly consists of non‐listed firms, etc.).

Besides the traditional audit fee model, based on seminal work by Simunic, the paper also estimates regression models in which the author allows coefficients to vary across Big4 and non‐Big4 auditors and control for self‐selection (based on a two‐stage procedure).

Using the traditional audit fee model, results suggest that Big4 auditors receive (or are able to charge) a fee premium compared to non‐Big4 auditors. Nevertheless, when the author allows regression coefficients to vary across Big4 and non‐Big4 auditors and control for self‐selection, the aforementioned finding does no longer hold. The results reveal differences in fee structures between Big4 and non‐Big4 auditors and suggest that Big4 auditors consider a richer set of variables when setting their fees.

Since Belgian firms are only required to disclose audit fees as from 2007 onwards, the analyses are based on data for one year only.

An important implication, at least from an academic point of view, is that the results clearly illustrate and corroborate the need to control for self‐selection when modelling audit fees (while this issue has been ignored by recent audit fee studies). The findings also have implications for the (Belgian) auditing profession. For example, the fact that significant differences are observed in audit pricing between the Big4 and non‐Big4 firms may have an impact on the (Belgian) audit services market (e.g. it might influence the competitive nature of the tendering process).

Using a two‐stage procedure, the results corroborate the need to control for self‐selection in modeling audit fees (an issue that has been largely ignored in the audit fee literature). In addition, the results reveal that Big4 and non‐Big4 auditors have different fee structures and that it is therefore important to allow the regression coefficients (and not only the intercept) to vary across both groups. Finally, the findings add to the very scarce evidence on audit pricing for non‐listed firms.

We examine how auditors' use of limited liability agreements (LLAs) impact perceptions of private company creditworthiness in a 2 × 2 between-subjects experiment. Ninety-three United States-based bank loan officers evaluate whether LLA clauses and the size of the company's external auditor impact lending decisions. We use signaling theory to predict, and we find that LLAs decrease perceived creditworthiness, mainly when the company engages a Non-Big4 auditor. We find no difference in perceived creditworthiness when the company employs a Big4 firm, irrespective of including an LLA clause. Supplemental analyses show that lenders perceive that LLA clauses signal higher credit risk and, in turn, decrease perceived creditworthiness. We offer insights into how lenders integrate information about privately held companies into their decisions, which could impact the cost of capital for private companies. Our study should be of interest to preparers and the varied users of financial statements and regulators.

The purpose of this study is to examine whether companies with high audit quality (AQ) are expected to use trade credit (TC) as a financing source. Traditionally, vendors are most likely to extend TC to creditworthy customers.

The author uses the data from 134,099 firm-year observations of nine Asian emerging markets from 2001 to 2017. Further, to check the impact of AQ on trade credit, the authors employ ordinary least square (OLS) with fixed effects, cluster effect regression and random effect.

The findings indicate that vendors extend more TC to the companies audited by the BIG4 auditors as, these independent practitioners have greater competencies, expert intellectual capital, global networking connections, and high investment in information technology. The authors, therefore, conjecture that the company's use of TC increases with their improved AQ, especially audited by BIG4. The results are found consistent with this prediction and robust to the alternative measures of trade credit. Similarly, this positive association is more pronounced with the BIG4 partner's unqualified audit opinion.

This study uses the sample of Asian Emerging countries but the researchers cannot generalize the results to developed countries or other regions.

This paper's findings have significant implications for the management, board of directors, shareholders and suppliers. Further, results are in favor of appointing BIG4 auditors to gain the trust of suppliers.

Despite the wide-ranging literature that discusses the importance of quality audits in enhancing the firms' financial disclosures that leads to better access to finance through investors and lenders. But the TC as a financing source is ignored in relation to AQ. The study’s results extend the literature associating companies' AQ with financial decisions.

Corporate corruption reporting (CCR) is an emerging issue of the corporation for measuring transparency, integrity and accountability to the stakeholders and society. The purpose of this paper is to examine the role of CCR and financial management responsibility regarding the issue of corruption control.

To explore the influences of corruption disclosure, this study considers the keywords-based content analysis of the listed financial firms of the Dhaka Stock Exchange in Bangladesh for 2012–2016. The research considers stakeholders and theoretical legitimacy lens for discussing corporate corruption disclosure. This study identified 143 self-driven keywords by classifying, analyzing and selecting the appropriate large set of keywords from the prior literature. This study examines 247 firm-year observations of all financial firms in Bangladesh using secondary data sources.

The results of the hierarchical regression analysis report that financial firms following Sharia principles have a negative and significant association with CCR, while Big4 has a positive and significant influence. Moreover, the interaction effect of Big4 on the relationship between Sharia principles and CCR is negative and insignificant. The findings reported that Islamic financial firms disclose less corruption information than conventional financial firms in Bangladesh.

This study findings are expected to significantly impact corporate management and policymakers of developing and highly corrupted economies to enhance corporate accountability, transparency and reputation. The regulatory body can consider the findings to promulgate anti-corruption reporting rules and regulations.

The authors believe the theoretical lens used to support the method and findings of this paper are unique and novel.

The purpose of this study is to explore the role of accountants as advisors in professional services firms (PSFs), and it examines the impact of digital transformation on the work, knowledge and skills of accountants in their role as advisors in PSFs.

Data were collected using semi-structured interviews predominantly with partners in Australian PSFs, including the Big4 and directors of professional accounting bodies.

The findings show that accountants as advisors fill a critical role in PSFs as they represent substantial human capital for such firms. Accountants as advisors are a valuable strategic resource because of their unique capabilities in combining generic human capital with digital human capital and social capital resources. Some differences between the Big4 and non-Big4 were found in terms of services offered that were attributable to the respective industry foci and resource availability.

The findings have broader implications for both the accounting profession and the education sector in terms of providing a better, and more overt, understanding of what the future holds for the accounting profession and the relevant knowledge and skills required. Also, recruiters and managers at PSFs are likely to benefit from the findings.

Evidence from PSFs provides insights into an evolutionary path for the accounting profession, and the knowledge and skills accountants need to work in that increasingly competitive domain, due to digital transformation.

Audit hour reporting is rare internationally. Thus, to what extent shareholders have the power to influence audit effort/hour demand is a question left unanswered. This study aims to use unique South Korean data to determine whether the increasing power of the largest foreign/domestic shareholders and blockholders can influence audit hour demand.

In this study ordinary least squares (OLS) regression analysis is conducted using a sample of Korean listed firms over the 2004–2018 sample period.

The results show: as the percentage equity holding of the largest foreign shareholder and blockholder (>5%) increases, audit hour demand increases. As the shareholding of the largest domestic shareholder increases, audit hour demanded decreases. The association between audit fees/hours is not qualitatively indifferent, after controlling for the audit fee premium effect. Furthermore, the largest foreign shareholder is shown to demand increasingly higher levels of audit hours from Big4 auditors, relative to NonBig4. All results are consistent with audit demand theory.

Whilst previous studies offer audit fee/risk interpretations, this study extends the literature by developing a framework to explain why audit hour demands differ for specific groups. Because audit hour information is rare internationally, the study has important policy implications.

This paper aims to examine whether family business groups’ (FBG) having the same network auditor among their affiliates mitigates earnings manipulation (EM).

This paper used unbalanced panel data from the years 2010–2019. The sample of the study is composed of 327 nonfinancial listed Pakistan Stock Exchange firms, consisting of 187 FBG-affiliated firms and 140 nonaffiliated firms. The ordinary least square and generalized least square regressions have been used to check the hypothesized relationship. Furthermore, the propensity score matching technique is used to ascertain comparable companies’ features and to control the potential endogeneity problem. Finally, the results are robust to various measures of EM and FBG’ proxies.

The findings of the study show that the same network auditor is reducing EM in FBG affiliates. In addition, the BIG4 same network auditors are also instrumental in constraining EM as compared to non-BIG4 audit firms. Overall, the results of this study depict that the same network auditor in FBG’s affiliated firms significantly influences EM. These results are robust with respect to generalized least squares and the endogeneity problem.

This research study has two important implications for the interested parties. First, although the authors find in this research study that the same network auditor is negatively associated with EM in the FBG-affiliated firms, however, FBG-affiliated firms might use opportunistically the real activity manipulation. Second, regulators highlight the change in audit partner/firm rotation, though the study findings indicate that regulators and practitioners may consider the benefits associated with the same network auditors for FBG.

This research study adds a new investigation to previous literature by examining the role of the same network auditors in the EM of the FBG’ affiliates. To the best of the author’s knowledge, this is the first study to bring new knowledge by investigating the role played by the same network auditors along with the BIG4 same network audit firms in constraining EM in FBG.