Abstract
| Original language | English |
|---|---|
| Title of host publication | Corporate Governance in Emerging Markets, CSR, Sustainability, Ethics and Governance |
| Publisher | Springer Berlin Heidelberg |
| Pages | 197-238 |
| Number of pages | 42 |
| ISBN (Print) | 9783642449543 |
| DOIs | |
| Publication status | Published - 1 Jan 2014 |
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Big 4 conservatism around the world. / CHUNG, Richard; FIRTH, Michael Arthur; KIM, Jeong Bon; PANG, Lei.
Corporate Governance in Emerging Markets, CSR, Sustainability, Ethics and Governance. Springer Berlin Heidelberg, 2014. p. 197-238.Research output: Book Chapters | Papers in Conference Proceedings › Book Chapter › Research › peer-review
TY - CHAP
T1 - Big 4 conservatism around the world
AU - CHUNG, Richard
AU - FIRTH, Michael Arthur
AU - KIM, Jeong Bon
AU - PANG, Lei
PY - 2014/1/1
Y1 - 2014/1/1
N2 - Conservatism is a long-established underlying principle of accounting but its implementation has come under the spotlight in recent years following the spate of well-publicized corporate collapses in the U.S. and elsewhere. Previous studies have shown that the Big 4 audit firms are more conservative than the non-Big 4 in the U.S. The current study examines whether the U.S. findings extend to other countries. In doing so, we make use of a relatively new measure of conservatism, namely, the C-score developed by Khan and Watts. We find that the conclusion drawn from U.S. studies, namely that the Big 4 are more conservative, extends to the international setting but only under certain conditions. Specifically, the Big 4 are more conservative in those countries where litigation and reputation risks, broadly defined, are high. This increase in conservatism represents a rational response by the Big 4 auditors to their greater exposure, vis-a-vis the non-Big 4 auditors, to litigation and reputation loss in those countries.
AB - Conservatism is a long-established underlying principle of accounting but its implementation has come under the spotlight in recent years following the spate of well-publicized corporate collapses in the U.S. and elsewhere. Previous studies have shown that the Big 4 audit firms are more conservative than the non-Big 4 in the U.S. The current study examines whether the U.S. findings extend to other countries. In doing so, we make use of a relatively new measure of conservatism, namely, the C-score developed by Khan and Watts. We find that the conclusion drawn from U.S. studies, namely that the Big 4 are more conservative, extends to the international setting but only under certain conditions. Specifically, the Big 4 are more conservative in those countries where litigation and reputation risks, broadly defined, are high. This increase in conservatism represents a rational response by the Big 4 auditors to their greater exposure, vis-a-vis the non-Big 4 auditors, to litigation and reputation loss in those countries.
UR - http://commons.ln.edu.hk/sw_master/3592
U2 - 10.1007/978-3-642-44955-0_8
DO - 10.1007/978-3-642-44955-0_8
M3 - Book Chapter
SN - 9783642449543
SP - 197
EP - 238
BT - Corporate Governance in Emerging Markets, CSR, Sustainability, Ethics and Governance
PB - Springer Berlin Heidelberg
ER -