Big Four Auditors’ Audit Quality and Earnings Management: Evidence from Turkish Stock Market
Alpaslan Yasar

Abstract
Audit quality is considered as one of the factors affecting the reliability of financial information. Theoretical arguments and research findings suggest that audit quality constrains earnings management. Given that auditor’s incentives to provide high quality audit is rather limited in emerging economies, the argument suggesting audit quality constrains the earnings management is likely to be questioned. The aim of this study is, therefore, to assess the effect of audit quality on earnings management by focusing on Turkish case, where auditor’s incentives to provide high quality audit is limited. Using a sample of manufacturing industry firms listed on Istanbul Stock Exchange (ISE) for the years 2003-2007, we find that audit firm size as proxy for audit quality, does not have an impact on discretionary accruals. These results indicate that there is no difference in audit quality between Big Four and non-Big Four audit firms for restriction of earnings management in Turkey.

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