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Mid-tier auditors gain traction in quest for large-cap clients
- Publisher
- Wiley
- Copyright
- © 2012 Blackwell Publishing Ltd
- ISSN
- 1090-6738
- eISSN
- 1099-1123
- DOI
- 10.1111/j.1099-1123.2012.00454.x
- Publisher site
- See Article on Publisher Site
Abstract
The Post‐SOX era coincides with the rise of the Second Tier auditing firms. Our study tests risk characteristics of new (and departing) clients versus continuing clients of the Second Tier to judge overall risks faced by this auditing tier. We add to the prior literature by focusing on prevalence and severity of restatement and internal control weaknesses (ICW). We show that the new clients of the Second Tier indeed have higher prevalence and severity of restatements and ICW. Departing clients also show a high risk profile compared to continuing clients, but the difference is perhaps not as strong as that indicated in the new versus continuing comparison. We confirm the widely held belief that the Second Tier is gaining market share, but this gain appears to be achieved in a somewhat controlled manner.
Journal
International Journal of Auditing – Wiley
Published: Nov 1, 2012