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Are the Most Capable Auditors in the Big 4 Firms? Model

Pedro Ortín Ángel (), Ana Millan Tapia () and Stefan Sundgren
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Ana Millan Tapia: Department of Business, Universitat Autònoma de Barcelona
Stefan Sundgren: Umeå School of Business and Economics

No 1601, Working Papers from Departament Empresa, Universitat Autònoma de Barcelona

Abstract: The CPA exam provides an evaluation of the auditors’ professional competences at the early stages of their careers. Using information from the results generated in Sweden, the paper shows that i) auditors at Big 4 firms are younger when they take the exam, ii) younger auditors and auditors at Big 4 firms perform better in the exam iii) there is a positive association between the results in the CPA exam and wage increases after having received the CPA certification and the association is stronger at Big 4 firms. This evidence is consistent with a theoretical model where Big 4 audit firms attract and retain the more capable auditors of each cohort, based on the imperfect information about the capabilities of the auditors that they have.

Keywords: North-South; growth model; innovation assimilation (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-acc
Date: 2016-01, Revised 2016-01
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Published in Working Papers at the Department of Business, January 2016, pages 1-60

Downloads: (external link) Revised version, 2016 (application/pdf)

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