 Do Big 4 auditors limit classification shifting? Evidence from IndiaNeerav Nagar, Naman Desai and Joshy Jacob Journal of International Accounting, Auditing and Taxation, 2021, vol. 42, issue C Abstract: Extant research suggests that Big 4 auditors compared to non-Big 4 auditors act as a superior deterrent to accrual-based earnings management. We extend this research to another form of earnings management, classification shifting. Our study examines whether Big 4 auditors are more likely to reduce classification shifting in settings where the enforcement of laws is weak. Big 4 accounting firms, because of their global operations, have incentives to develop and maintain strong and uniform reputation globally. Consistent with this argument, we find that employing Big 4 auditors in India is associated with significantly lower levels of classification shifting. Our results also indicate that Big 4 auditors are likely to charge significantly higher fees than non-Big 4 auditors, which, in turn, is associated with a significant reduction in classification shifting. Keywords: Classification shifting; Big 4 auditors; Audit fee premium; India (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jiaata:v:42:y:2021:i:c:s106195182100001x DOI: 10.1016/j.intaccaudtax.2021.100376 Access Statistics for this article Journal of International Accounting, Auditing and Taxation is currently edited by R. Larson More articles in Journal of International Accounting, Auditing and Taxation from Elsevier |
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