Two-Sided Matching in the Audit Market

• 成果类型: Article
• 署名作者: Li, Ken; McNichols, Maureen; Raghunandan, Aneesh
• 署名单位: McMaster University; Stanford University; Yale University
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/TAR-2022-0074
• 发表日期: 2025
• 页码: 363-394
• 关键词: Litigation risk; client; QUALITY; CONSEQUENCES; management; selection; big-4

摘要

We develop and estimate a two-sided matching model of auditors and clients. We find evidence that auditors and clients engage in matching based on their preferences on both observable and unobservable characteristics. This matching appears to partly explain the Big 4 effect on audit outcomes: after controlling for the effects of matching, we find that the positive influence of having a Big 4 auditor on serious restatements and serious comment letter conversations with the SEC either weakens or disappears. Collectively, our results highlight the importance of accounting for two-sided matching between auditors and clients in understanding the influence of auditors on clients' financial reporting practices.