Auditor style and financial statement comparability

Iowa State University, watanabe@iastate.edu Follow this and additional works at: https://lib.dr.iastate.edu/acct_pubs Part of the Accounting Commons , Business Administration, Manageme

Iowa State University, watanabe@iastate.edu

Follow this and additional works at: https://lib.dr.iastate.edu/acct_pubs

Part of the Accounting Commons , Business Administration, Management, and Operations Commons ,

Business Analytics Commons , Corporate Finance Commons , Finance and Financial Management

Commons , Portfolio and Security Analysis Commons , and the Strategic Management Policy Commons

Recommended Citation

Francis, Jere R.; Pinnuck, Matthew L.; and Watanabe, Olena, "Auditor Style and Financial Statement

Comparability" (2014) Accounting Publications 12

https://lib.dr.iastate.edu/acct_pubs/12

This Article is brought to you for free and open access by the Accounting at Iowa State University Digital

Repository It has been accepted for inclusion in Accounting Publications by an authorized administrator of Iowa State University Digital Repository For more information, please contact digirep@iastate.edu

Abstract

The term “audit style” is used to characterize the unique set of internal working rules of each Big 4 audit firm for the implementation of auditing standards and the enforcement of GAAP within their clienteles Audit style implies that two companies audited by the same Big 4 auditor, subject to the same audit style, are more likely to have comparable earnings than two firms audited by two different Big 4 firms with different styles By comparable we mean that two firms in the same industry and year will have a more similar accruals and earnings structure For a sample of U.S companies for the period 1987 to 2011, we find evidence consistent with audit style increasing the comparability of reported earnings within a Big 4 auditor's clientele

Comments

This accepted article is published as Jere R Francis, Matthew L Pinnuck, and Olena Watanabe (2014) Auditor Style and Financial Statement Comparability The Accounting Review: March 2014, Vol 89, No 2,

pp 605-633 Doi: 10.2308/accr-50642 Posted with permission

This article is available at Iowa State University Digital Repository: https://lib.dr.iastate.edu/acct_pubs/12

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