IDEAS home Printed from https://ideas.repec.org/a/cmj/seapas/y2017i15p419-425.html
   My bibliography  Save this article

The Impact Of Auditor Affiliation On Financial Statement Relevance

Author

Listed:
  • Radu-Daniel LOGHIN

    (Independent Researcher)

Abstract

The role of the audit report is to provide a level of trust to the professional judgment behind the financial statements of a company. The market for audit services is not a homogenous one, and large audit partners known as the Big 4 dominate with their partner networks in both developed and emerging markets. The scientific literature provides a rich background of studies linking auditor affiliation and auditor independence. The current exploratory paper tries to approach the issue of auditor independence and affiliation by drawing on the Ohlson model for a sample of 552 firm-year observations from the Borsa Istanbul, covering the 2014 and 2015 financial periods. The results reveal a strong correlation for the year 2015 between the Big 4 affiliation and the value of the equities, possibly suggesting a correlation between auditor independence and financial statement relevance.

Suggested Citation

  • Radu-Daniel LOGHIN, 2017. "The Impact Of Auditor Affiliation On Financial Statement Relevance," SEA - Practical Application of Science, Romanian Foundation for Business Intelligence, Editorial Department, issue 15, pages 419-425, December.
    • Handle: RePEc:cmj:seapas:y:2017:i:15:p:419-425
    as

    Download full text from publisher

    File URL: http://seaopenresearch.eu/Journals/articles/SPAS_15_13.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Hanna, Michael E. & Kiymaz, Halil & Perdue, Grady, 2001. "Portfolio diversification in a highly inflationary emerging market," Financial Services Review, Elsevier, vol. 10(1-4), pages 303-314.
    2. Healy, Paul & Lys, Thomas, 1986. "Auditor changes following big eight mergers with non-big eight audit firms," Journal of Accounting and Public Policy, Elsevier, vol. 5(4), pages 251-265.
    3. Sullivan, Mary W, 2002. "The Effect of the Big Eight Accounting Firm Mergers on the Market for Audit Services," Journal of Law and Economics, University of Chicago Press, vol. 45(2), pages 375-399, October.
    4. Aktham I. Maghyereh & Haitham A. Al-Zoubi, 2006. "Value-at-risk under extreme values: the relative performance in MENA emerging stock markets," International Journal of Managerial Finance, Emerald Group Publishing, vol. 2(2), pages 154-172, July.
    5. Linthicum, Cheryl & Reitenga, Austin L. & Sanchez, Juan Manuel, 2010. "Social responsibility and corporate reputation: The case of the Arthur Andersen Enron audit failure," Journal of Accounting and Public Policy, Elsevier, vol. 29(2), pages 160-176, March.
    6. Yigit Bora Senyigi, 2014. "Determinants of voluntary IFRS adoption in an emerging market: Evidence from Turkey," Journal of Accounting and Management Information Systems, Faculty of Accounting and Management Information Systems, The Bucharest University of Economic Studies, vol. 13(3), pages 449-465, September.
    7. Oliveira, Lídia & Rodrigues, Lúcia Lima & Craig, Russell, 2010. "Intangible assets and value relevance: Evidence from the Portuguese stock exchange," The British Accounting Review, Elsevier, vol. 42(4), pages 241-252.
    8. Diyarbakirlioglu, Erkin, 2011. "Foreign equity flows and the “Size Bias”: Evidence from an emerging stock market," Emerging Markets Review, Elsevier, vol. 12(4), pages 485-509.
    9. Clive Lennox & Jeffrey A. Pittman, 2010. "Big Five Audits and Accounting Fraud," Contemporary Accounting Research, John Wiley & Sons, vol. 27(1), pages 6-6, March.
    10. Dahmash, Firas N. & Durand, Robert B. & Watson, John, 2009. "The value relevance and reliability of reported goodwill and identifiable intangible assets," The British Accounting Review, Elsevier, vol. 41(2), pages 120-137.
    11. Cooper, David J. & Greenwood, Royston & Hinings, Bob & Brown, John L., 1998. "Globalization and nationalism in a multinational accounting firm: The case of opening new markets in Eastern Europe," Accounting, Organizations and Society, Elsevier, vol. 23(5-6), pages 531-548.
    12. Erkin Diyarbakirlioglu, 2011. "Foreign equity flows and the "Size Bias" : Evidence from an emerging stock market," Post-Print hal-01127657, HAL.
    13. DeAngelo, Linda Elizabeth, 1981. "Auditor independence, `low balling', and disclosure regulation," Journal of Accounting and Economics, Elsevier, vol. 3(2), pages 113-127, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. DeFond, Mark & Zhang, Jieying, 2014. "A review of archival auditing research," Journal of Accounting and Economics, Elsevier, vol. 58(2), pages 275-326.
    2. Lorena Mitrione & George Tanewski & Jacqueline Birt, 2014. "The relevance to firm valuation of research and development expenditure in the Australian health-care industry," Australian Journal of Management, Australian School of Business, vol. 39(3), pages 425-452, August.
    3. Lai, Kam-Wah, 2019. "Audit report lag, audit fees, and audit quality following an audit firm merger: Evidence from Hong Kong," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 36(C), pages 1-1.
    4. Kenneth B. Schwartz & Billy S. Soo, 1996. "The Association Between Auditor Changes and Reporting Lags," Contemporary Accounting Research, John Wiley & Sons, vol. 13(1), pages 353-370, March.
    5. Wouter Dutillieux & Donald Stokes & Marleen Willekens & Gary Monroe, 2013. "Strategic pricing by Big 4 audit firms in private client segments," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 53(4), pages 961-994, December.
    6. Dong Xiang & Abul Shamsuddin & Andrew C Worthington, 2011. "A comparative technical, cost and profit efficiency analysis of Australian, Canadian and UK banks: Feasible efficiency improvements in the context of controllable and uncontrollable factors," Discussion Papers in Finance finance:201119, Griffith University, Department of Accounting, Finance and Economics.
    7. Smith, Julia A. & Cordina, Renzo, 2014. "The role of accounting in high-technology investments," The British Accounting Review, Elsevier, vol. 46(3), pages 309-322.
    8. Maigoshi, Zaharaddeen Salisu & Latif, Rohaida Abdul & Kamardin, Hasnah, 2018. "Change in value-relevance of disclosed RPT across accounting regimes: Evidence from Malaysia," Research in International Business and Finance, Elsevier, vol. 44(C), pages 422-433.
    9. Bamiatzi, Vassiliki & Bozos, Konstantinos & Lambertides, Neophytos, 2016. "Mapping the trading behavior of the middle class in emerging markets: Evidence from the Istanbul Stock Exchange," International Business Review, Elsevier, vol. 25(3), pages 679-690.
    10. Yang, Dan & Jiao, Hao & Buckland, Roger, 2017. "The determinants of financial fraud in Chinese firms: Does corporate governance as an institutional innovation matter?," Technological Forecasting and Social Change, Elsevier, vol. 125(C), pages 309-320.
    11. Rind, Asad Ali & Abbassi, Wajih & Allaya, Manel & Hammouda, Amira, 2022. "Local peers and firm misconduct: The role of sustainability and competition," Economic Modelling, Elsevier, vol. 116(C).
    12. María Dolores García-Gallo & Félix Jiménez-Naharro & Miguel Torres-García & Susan L. Giesecke & José Guadix-Martín, 2020. "Incorporation of the Intangibles into the Spanish Start-Ups by Activity Sector and Region. Improving Their Economic Sustainability," Sustainability, MDPI, vol. 12(10), pages 1-20, May.
    13. Mark DeFond & David H. Erkens & Jieying Zhang, 2017. "Do Client Characteristics Really Drive the Big N Audit Quality Effect? New Evidence from Propensity Score Matching," Management Science, INFORMS, vol. 63(11), pages 3628-3649, November.
    14. Curatola, Giuliano & Donadelli, Michael & Grüning, Patrick, 2015. "Matching the BRIC equity premium: A structural approach," Emerging Markets Review, Elsevier, vol. 22(C), pages 65-75.
    15. Gonçalves, Rute & Lopes, Patrícia & Craig, Russell, 2017. "Value relevance of biological assets under IFRS," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 29(C), pages 118-126.
    16. Dong Xiang & Parmendra Sharma & Yuming Zhang, 2019. "The Global Financial Crisis, Fiscal Stimulus Package and the Chinese Banking Sector — A Pre- and Post-Efficiency Analysis," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 22(02), pages 1-43, June.
    17. Groh, Alexander Peter & Wich, Matthias, 2012. "Emerging economies' attraction of foreign direct investment," Emerging Markets Review, Elsevier, vol. 13(2), pages 210-229.
    18. Dargenidou, Christina & Jackson, Richard H.G. & Tsalavoutas, Ioannis & Tsoligkas, Fanis, 2021. "Capitalisation of R&D and the informativeness of stock prices: Pre- and post-IFRS evidence," The British Accounting Review, Elsevier, vol. 53(4).
    19. Rajat Deb & Mukesh Nepal & Sourav Chakraborty, 2023. "IFRS and Audit Quality: A Systematic Literature Review," Management and Labour Studies, XLRI Jamshedpur, School of Business Management & Human Resources, vol. 48(1), pages 118-138, February.
    20. Shah, Syed Zulfiqar Ali & Liang, Shuang & Akbar, Saeed, 2013. "International Financial Reporting Standards and the value relevance of R&D expenditures: Pre and post IFRS analysis," International Review of Financial Analysis, Elsevier, vol. 30(C), pages 158-169.

    More about this item

    Keywords

    Turkey; Big4; Audit; Relevance;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cmj:seapas:y:2017:i:15:p:419-425. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Serghie Dan (email available below). General contact details of provider: https://seaopenresearch.eu/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.