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Title: Audit quality, second-tier and size: effect on the Spanish private distressed firms
Authors: Aguiar-Díaz, Inmaculada 
Díaz-Díaz, Nieves L. 
UNESCO Clasification: 5311 Organización y dirección de empresas
Keywords: Auditoría
Issue Date: 2015
Publisher: 0210-2412
Journal: Revista Española de Financiación y Contabilidad 
Abstract: This paper aims to analyse the effect of the client size on the probability for an audit failure when the auditor issues the report, which is a sign of lower audit quality. The results for a sample of Spanish privately distressed firms, differentiating Big4 from Second-Tier and other auditors, suggest that there is a different auditor behaviour based on the client size. The Big4 and Second-Tier auditors provide higher audit quality in larger client firms than other auditors. These results can reflect the importance of protecting auditor reputation on its possible dependence of its client. Further, when considering small client firms, the results reveal that the Second-Tier auditors’ failure is higher than for other auditors. This could be explained by their lower concern about reputational loss, considering the lower visibility and litigation cost of this type of clients. However, this lower quality of the Second-Tier auditors is not observed when the client firm bankruptcy is imminent.
ISSN: 0210-2412
DOI: 10.1080/02102412.2014.982386
Source: Revista Espanola de Financiacion y Contabilidad[ISSN 0210-2412],v. 44, p. 24-46
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