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Evidence on (the lack of) audit-quality differentiation in the private client segment of the belgian audit market

Author

Listed:
  • Heidi Vander Bauwhede
  • Marleen Willekens

Abstract

This paper contributes to the empirical audit-quality literature and provides evidence on (the lack of) audit-quality differentiation in the private client segment of the Belgian audit market. Auditor size is used as audit-quality proxy. Prior evidence on audit-quality differentiation between Big Six and non-Big Six auditors in the private client segment of the Belgian audit market is mixed. In this paper we investigate whether these mixed results stem from the inability of the dichotomous Big Six/non-Big Six variable to capture auditor-size differences in a less concentrated audit market. To that end we examine whether alternative continuous measures of audit-firm size (i.e. auditor market share, number of audit-firm clients, number of partners in the audit firm, total assets and operating profit of the audit firm) have a constraining impact on earnings management in a large sample of privately held Belgian companies (n = 1,302). Overall, we do not find evidence that is supportive of quality differentiation in the private client segment of the Belgian audit market.

Suggested Citation

  • Heidi Vander Bauwhede & Marleen Willekens, 2004. "Evidence on (the lack of) audit-quality differentiation in the private client segment of the belgian audit market," European Accounting Review, Taylor & Francis Journals, vol. 13(3), pages 501-522.
    • Handle: RePEc:taf:euract:v:13:y:2004:i:3:p:501-522
    DOI: 10.1080/0963818042000237106
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    References listed on IDEAS

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