Do big 4 auditors provide more timely audit after controlling for audit quality?

Shu Lin, Lizhong Hao and Shengqiang Liu

Managerial Auditing Journal, 2025, vol. 40, issue 3, 328-353

Abstract: Purpose - The purpose of this study is to examine the audit efficiency and timeliness of Big 4 auditors relative to non-Big 4 auditors, where audit efficiency is defined as the auditor’s ability to conduct an audit more quickly or with fewer resources while still achieving effective outcomes. Design/methodology/approach - The authors use audit report lags (also referred to as audit delay) as a proxy for audit timeliness and efficiency, controlling for audit quality and audit fees (audit input). The authors use a propensity-score matching (PSM) approach to construct a pseudorandom sample in which each non-Big 4 client is matched with a similar Big 4 client based on their characteristics and audit quality, to control for potential endogeneity related to self-selection bias in this setting. Findings - The authors find that non-Big 4 auditors are associated with shorter audit delays than Big 4 auditors. Additional analysis of the matched sample reveals that non-Big 4 auditors charge lower fees than Big 4 auditors do after controlling for the Big 4 premium. These findings do not support the notion that Big 4 auditors conduct audits more efficiently than non-Big 4 auditors do. Originality/value - These results could be of interest to the management of public firms, audit committees, investors and regulators; provide valuable insights into the performance of audit firms in varying client environments; and contribute to a better understanding of audit timeliness and efficiency.

Keywords: Audit efficiency; Timeliness; Audit quality; Big 4 versus non-Big 4 auditors; Propensity-score matching (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eme:majpps:maj-12-2023-4175

DOI: 10.1108/MAJ-12-2023-4175

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