Journal article
The revival of large consulting practices at the Big 4 and audit quality
Accounting, organizations and society, Vol.87, p.101157
11/01/2020
DOI: 10.1016/j.aos.2020.101157
Abstract
The Big 4 have acquired numerous consulting firms since the late 2000s, and regulators are concerned that a focus on consulting practices could negatively affect audit quality through audit firm culture. Audit firms counter by arguing that expertise gained through consulting can improve knowledge brought to audits. Using a difference-in-differences design, restatements as an audit quality proxy, and enterprise resource planning(non-enterprise resource planning-) related acquisitions as a proxy for audit (non-audit-) related acquisitions, we find nuanced support for both positions, depending on acquisition type. Audit quality increases (decreases) at the local office level after the acquisition of consulting firms that provide services that relate (do not relate) to the audit. Semi-structured interviews of 17 highly-experienced audit practitioners suggest that consulting firm acquisitions positively (negatively) affect audit quality through expertise transfer (shifting the culture towards commercialism) when acquisitions are (are not) audit-related. Thus, the effect of consulting firm acquisitions on audit quality appears to depend on how closely the acquired services are related to the audit. (C) 2020 Elsevier Ltd. All rights reserved.
Details
- Title: Subtitle
- The revival of large consulting practices at the Big 4 and audit quality
- Creators
- Dain C. Donelson - University of IowaMatthew Ege - Texas A&M Univ. United StatesAndrew J. Imdieke - University of Notre DameEldar Maksymov - Arizona State University
- Resource Type
- Journal article
- Publication Details
- Accounting, organizations and society, Vol.87, p.101157
- Publisher
- Elsevier
- DOI
- 10.1016/j.aos.2020.101157
- ISSN
- 0361-3682
- eISSN
- 1873-6289
- Number of pages
- 20
- Grant note
- DOI: 10.13039/100007482, name: Arizona State University
- Language
- English
- Date published
- 11/01/2020
- Academic Unit
- Accounting; Law Faculty
- Record Identifier
- 9984380484702771
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