Big 4 auditor affiliation and accruals quality in Bangladesh

Citation data:

Managerial Auditing Journal, ISSN: 0268-6902, Vol: 26, Issue: 2, Page: 161-181

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10.1108/02686901111095029; 10.1108/03068291311304991; 10.1108/03090561311297508; 10.1108/maj-05-2013-0867; 10.1108/02686901111129580
Kabir, M. Humayun; Sharma, Divesh; Islam, Md Ainul; Salat, Amiros
Emerald; NSUWorks; Emerald Group Publishing Limited
Business, Management and Accounting; Economics, Econometrics and Finance; Social Sciences; Accruals quality; Audit quality; Bangladesh; Big 4 affiliates; Investor protection; community partnerships; competencies; interdisciplinary and interprofessional education; Earnings management; Corporate social responsibility; Environmental performance; Climate; Earnings quality; murder; democracy; income distribution; political economics; crime; social economics; earnings management; corporate social responsibility; environmental performance; climate; earnings quality; Auditing; Quality; Auditors; sales manager support; emotional exhaustion; customer-oriented selling; motivation; salespeople; time management; sales management; sales agents; selling; cognitive measure of internationalization; geocentric mindset; global mindset; International Business; Education; Social Work; Economics; Accounting; Business; Marketing
article description
Purpose: Bangladesh is an emerging economy and international audit firms operate there through affiliated local audit firms. The Bangladesh audit market can be characterized as an intensely competitive small audit market with relatively poor demand for high-audit quality. In addition, Bangladesh has a relatively small and under developed but growing capital market that is characterized by poor corporate regulation and weak investor protection. The purpose of this paper is to examine the association between Big 4 affiliated auditors and accruals quality in Bangladesh. Design/methodology/approach: Following prior literature, this paper uses both absolute discretionary accruals and signed discretionary accruals as proxies of accruals quality. The sample is 382 firm-year observations and covers fiscal years 2000-2003. Findings: It was found that the association between Big 4 affiliates and accruals quality in Bangladesh depends on measures of accruals quality and accruals models used. Overall, Big 4 affiliates do not have a positive impact on accruals quality of their clients in Bangladesh. Originality/value: This paper contributes to the literature on audit quality and accruals quality. The results potentially suggest that Big 4 affiliates do not have any positive impact on accruals quality of clients in an intensely competitive audit market where the demand for quality audit is poor and monitoring is lax and raise potential implications for policy makers and market participants in Bangladesh. © Emerald Group Publishing Limited.