This study examines whether differences in proxies for audit-quality between Big 4 and non-Big 4 audit firms could be a reflection of their respective clients' characteristics. In our analyses, we use three audit-quality proxies: discretionary accruals, the ex ante cost of equity capital, and...

The market for audit services has been the subject of extensive academic research since the 1970’s. The prevailing view is that audit markets are characterized by tiers of suppliers (Big 4 vs. non-Big 4, and industry specialists vs. non-specialists) where the upper-tier suppliers produce and...

We develop a measure to capture an audit firm's competitive position in a local audit market based on the transaction costs of changing audit firms included in DeAngelo's (1981) multi-period audit pricing model. Our competition measure reflects the size difference between the largest audit firm...

Auditors' propensity to issue Going Concern Audit Reports (GCARs) is one of the proxies often used for audit quality. Although this propensity is a distinguishing characteristic of auditors, it does not indicate quality according to both theory and practice. In theory, higher-quality auditors...