the importance of audit profession development in emerging market countries

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1、THEACCOUNTINGREVIEWAmericanAccountingAssociationVol.86,No.5DOI:10.2308/accr-100972011pp.17311764TheImportanceofAuditProfessionDevelopmentinEmergingMarketCountriesPaulN.MichasTheUniversityofArizonaABSTRACT:Thisstudyinvestigatesthecountry-leveldevelopmentoftheauditprofessioninemergingmarketcountries

2、andwhetherthisdevelopmentisassociatedwithauditqualityandauditorchoice.Ifindthatauditqualityishigherforclientcompanieslocatedincountrieswithamoredevelopedauditprofession,aftercontrollingforruleoflawandinvestorprotection.Specifically,Big4clientcompanies’totalandabnormalaccrualsarebothlower,andearnin

3、gsaremoreconservativeincountrieswithstrongerAuditProfessionDevelopment(APD).However,theseresultsholdonlyforcompaniesauditedbyaBig4auditor.ResultsalsoindicatethatstrongerAPDisassociatedwithagreaterlikelihoodthataclientcompanyhiresaBig4auditor.Myfindingscontributetotheliteraturethatexploresdifferenc

4、esinauditqualityanddeterminantsofauditorchoice,theliteraturethatexplorescross-countrydifferencesinauditprofessions,andresearchonthecharacteristicsandeffectivenessofauditinstitutionsinemergingmarketeconomies.Keywords:auditprofession;auditorchoice;auditquality;developingcountries;emergingmarkets;int

5、ernationalaccounting.DataAvailability:Dataarepubliclyavailable.I.INTRODUCTIONheobjectiveofthisstudyistoinvestigatethecountry-leveldevelopmentoftheauditTprofessioninemergingmarketcountriesandwhetherthisdevelopmentisassociatedwithauditqualityandauditorchoice.Analysisoftheauditprofessioninthesecountr

6、iesshowswidevariationintheadoptionofbasicauditprofessionrulesandregulations.Iaggregateanumberofthesebasicauditprofessioncharacteristicsforasampleofemergingmarketcountriesandinvestigatewhetherauditprofessiondevelopment(APD)inacountryisassociatedwithauditqualityandauditorchoice.Giventhattheauditprof

7、essioninmanyemergingmarketcountrieslacksevenbasicauditrulesandregulations,itisimportanttoinvestigatewhethertheimplementationofIappreciatecommentsonpreviousdraftsprovidedbyStevenJ.Kachelmeier(editor),twoanonymousr