Audit size and earnings value relevance in Malaysia

• Main Authors: Abdul Manaf, Kamarul Bahrain, Amran, Noor Afza, Ishak, Rokiah
• Format: Article
• Language: English
• Published: International Information Institute 2016
• Subjects: HF5601 Accounting
• Online Access: http://repo.uum.edu.my/19733/1/I%2019%207%28A%29%202016%202655%202659.pdf; http://repo.uum.edu.my/19733/; http://www.information-iii.org/abs_e2.html

We examine the difference in audit quality between Big 4 audit firms and non-Big 4 audit firms, whereby we us earnings value relevance as a proxy for audit quality. Our sample is non-financial firms listed on Bursa Malaysia. Based on 4, 127 firm-year observations over the period 2003-2012, we find that earnings of firms audited by Big 4 audit firms are more value relevant that earnings of firms audited by non-Big 4 audit firms.This is evidenced by higher regression coefficient on earnings and coefficient of determination, the adjusted R2, for firms audited by Big 4 audit firms. Our results indicate that audit is of higher quality for Big 4 audit firms.