Abstract
In the audit industry, the reputation of the different players is of paramount importance, as customers tend to rely on ‘social proof’ of competence rather than attempting directly to assess the quality of audit work. The relevance of the topic is testified by the number of studies which have investigated the reputation audit firms enjoy among their clients, by analyzing features such as whether the Big audit firms are attributed audit fee premiums in comparison to non-big audit firms. This article differs from these studies in that it investigates audit firms’ reputation by collecting the judgments and opinions of client-firms. Contrary to the widespread assumption that the Big audit firms as a group enjoy a better reputation than the non-Big audit firms among their clients, we discovered that the Big Four are not necessarily perceived as superior in comparison to their smaller counterparts. Moreover, we found evidence of reputational differences even within the Big Four group.
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Notes
We are treating the purchaser of the audit services, the client company, as the customer. We recognize that the ultimate consumer is the shareholder, but shareholders have limited powers in hiring auditors or in determining their remuneration.
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Acknowledgements
We are grateful to Michele Laoreti for the delivering of questionnaires to banks and insurance companies. We would also wish to thank participants of the EIASM-Bocconi Workshop on Audit Quality (Milan, November 2006) and of the 11th International Conference on Corporate Reputation, Brand, Identity and Competitiveness, (Oslo, May 2007) and the two anonymous, referees for their precious comments. We are finally grateful to MIUR, ‘Progetti di ricerca di interesse nazionale cofinanziati dal MIUR – Anno 2002’ and Universita Bocconi for financial support.
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Cameran, M., Gabbioneta, C., Moizer, P. et al. What do Client-firms Think of their Auditors? Evidence from the Italian Market. Corp Reputation Rev 12, 316–326 (2010). https://doi.org/10.1057/crr.2009.23
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DOI: https://doi.org/10.1057/crr.2009.23