Audit quality and properties of analyst earnings forecasts

• 成果类型: Article
• 署名作者: Behn, Bruce K.; Choi, Jong-Hag; Kang, Tony
• 署名单位: University of Tennessee System; University of Tennessee Knoxville; Seoul National University (SNU); State University System of Florida; Florida Atlantic University
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr.2008.83.2.327
• 发表日期: 2008
• 页码: 327-349
• 关键词: industry specialization; LITIGATION

摘要

Under the assumption that audit quality relates positively to unobservable financial reporting quality, we investigate whether audit quality is associated with the predictability of accounting earnings by focusing on analyst earnings forecast properties. The evidence shows that analysts' earnings forecast accuracy is higher and the forecast dispersion is smaller for firms audited by a Big 5 auditor We further find that auditor industry specialization is associated with higher forecast accuracy and less forecast dispersion in the non-Big 5 auditor sample but not in the Big 5 auditor sample. Overall, our results suggest that high-quality audit provided by Big 5 auditors and industry specialist non-Big 5 auditors is associated with better forecasting performance by analysts.