审计质量中心与盈余管理在欧洲证据显示私人客户外文翻译.docVIP

外文翻译 原文 Earnings Management and Audit Quality in Europe: Evidence from the Private Client Segment Market Material Source: University of Antwerp Author: Brenda Van Tendeloo 1. Introduction Audit quality differentiation between Big 4 and non-Big 4 audit firms has received considerable attention in prior research. However, prior studies on audit quality differentiation have almost exclusively focused on public firms.We investigate whether audit quality differentiation also exists in the private client segment market. From an economic perspective, there are opposing arguments for (and against) expecting audit quality differentiation to hold in the private client segment market. On the one hand, it could be argued that, relying on internationally recognized brand names, Big 4 firms have an incentive to provide a uniform level of audit quality across different market segments and hence would be inclined to supply high quality audits also in privately held client firms. On the other hand, one could argue that Big 4 auditors would be more lenient for private client firms compared to public client firms due to the lower risk of litigation for private firms. Indeed, Dye (1993) shows that a less litigious setting should weaken the extent to which theauditor’s wealth serves as a bond for audit quality. Hence, it is an empirical question whether reputation concerns of Big 4 auditors are sufficiently strong to control the higher moral hazard risk in the private client segment market. We use the extent in which earnings management is constrained as a measure of audit quality differentiation. Prior research (e.g. Becker et al., 1998; Francis et al., 1999) has shown that Big 4 auditors provide a significant constraint on earnings management for public firms. We investigate whether this also holds for private firms. In particular, we focus on private firms across different European countries. Private firms constitute the majority of the EU economy and of the EU m