skip to main content
Language:
Search Limited to: Search Limited to: Resource type Show Results with: Show Results with: Search type Index

Perceived Auditor Quality and the Earnings Response Coefficient

The Accounting review, 1993-04, Vol.68 (2), p.346-366 [Peer Reviewed Journal]

Copyright American Accounting Association ;Copyright American Accounting Association Apr 1993 ;ISSN: 0001-4826 ;EISSN: 1558-7967 ;CODEN: ACRVAS

Full text available

  • Title:
    Perceived Auditor Quality and the Earnings Response Coefficient
  • Author: Teoh, Siew Hong ; Wong, T. J.
  • Subjects: Accountants ; Analytical forecasting ; Auditing profession ; Auditors ; Auditors reports ; Big Six accounting firms ; Coefficients ; Comparative studies ; Control variables ; Earnings ; Earnings trends ; Financial audits ; Investors ; Modeling ; Observational research ; Proxy reporting ; Proxy statements ; Statistical analysis ; Stock prices
  • Is Part Of: The Accounting review, 1993-04, Vol.68 (2), p.346-366
  • Description: An auditor's reputation lends credibility to the earnings report that he audits. An unresolved issue is whether auditor size is correlated with auditor quality, where a high-quality auditor is defined as one who brings about more credible earnings reports. According to basic intuition and a modified Holthausen-Verrecchia (1988) model, investors' response to an earnings surprise will depend on the perceived credibility of the earnings report. In this study, we examine whether the earnings response coefficient (ERC) differs between Big Eight (B8) and non-Big Eight (NB8) audited firms. This provides a test of the joint hypotheses that auditor size is a proxy for auditor credibility and of the modified H-V model. Consistent with the joint hypotheses, we find that the ERCs of Big Eight clients are statistically significantly higher than for non-Big Eight clients. The result obtains in both a matched sample of firms paired according to industry membership, and a switch sample of firms grouped according to shifts from and to B8 and NB8 auditors. Furthermore, the result is robust with respect to the inclusion of other explanatory factors for ERC that have been suggested by previous studies: growth and persistence, risk, firm size, and predisclosure information environment.
  • Publisher: Menasha, Wis: American Accounting Association
  • Language: English
  • Identifier: ISSN: 0001-4826
    EISSN: 1558-7967
    CODEN: ACRVAS
  • Source: ProQuest Central
Back to results list
INSPIRE LIBRARY - TON DUC THANG UNIVERSITY (84-028) 37 755 057 Feedback
19 Nguyen Huu Tho St. Dist.7, HCM thuvien@tdtu.edu.vn

Copyright © 2017 INSPIRE LIBRARY - TON DUC THANG UNIVERSITY

Searching Remote Databases, Please Wait