Please use this identifier to cite or link to this item: http://hdl.handle.net/11718/25772
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dc.contributor.authorJain, Sonali-
dc.contributor.authorAgarwalla, Sobhesh Kumar-
dc.date.accessioned2022-08-12T09:13:53Z-
dc.date.available2022-08-12T09:13:53Z-
dc.date.issued2022-08-12-
dc.identifier.citationJain, S. and Agarwalla, S.K. (2022), "Big-4 auditors and audit quality: a novel firm life-cycle approach", Meditari Accountancy Research, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/MEDAR-06-2021-1344en_US
dc.identifier.issn2049-372X-
dc.identifier.urihttp://hdl.handle.net/11718/25772-
dc.description.abstractPurpose: Firm-specific factors such as size, profitability, growth, risk and complexity, in addition to agency-related issues determine both auditor selection and firm life-cycle stage. This paper aims to examine whether and how the effect of Big-4 auditors (B4As) on client firms’ audit quality varies across firms’ life-cycle stages. Design/methodology/approach: The sample comprises 1,813 firm-year observations in India’s emerging economy from 2011 to 2020. The Modified Jones model and Jones (signed, unsigned) model are used to compute discretionary accruals/audit quality. The authors use Koh et al.’s (2015) methodology to determine the firm life cycle. Findings: The authors’ key findings show that the client firms employing B4As have superior audit quality than those employing non-Big-4 auditors (NB4As). The authors also show that the life-cycle stage significantly impacts the relationship between B4As and a firm’s audit quality. Furthermore, B4A client firms report superior audit quality vis-à-vis NB4A firms only in the birth- and decline-stages. The audit quality of growth- and mature-stage B4A and NB4A client firms is not significantly different. Practical implications: Implications for managers include the decision to hire B4As. Given that B4As earn a significant fee premium, managers leading birth- and decline-stage firms should hire B4As, while managers of growth- and mature-stage firms should not. Originality/value: To the best of the authors’ knowledge, this is the first paper to examine the moderating effect of the firm life-cycle stage on the selection of B4As and their impact on audit quality.en_US
dc.language.isoenen_US
dc.publisherEmeralden_US
dc.relation.ispartofMeditari Accountancy Researchen_US
dc.subjectIndiaen_US
dc.subjectDiscretionary accrualsen_US
dc.subjectAudit qualityen_US
dc.subjectBig 4 affiliatesen_US
dc.subjectFirm life cycleen_US
dc.titleBig-4 auditors and audit quality: a novel firm life-cycle approachen_US
dc.typeArticleen_US
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