An International Meeting of the American Accounting Association American Accounting Association 2006 Annual Meeting August 6–9, 2006 Washington, D.C.

Thanyaluk Vichitsarawong
Oklahoma State University/ Chulalongkorn University

Sompong Pornupatham
Cardiff University/ Chulalongkorn University

Abstract: This paper examines the differences in auditor conservatism between Big 4 and non-Big 4 during the financial crisis and post-crisis periods in Thailand. In the crisis period, results indicate that firms are less conservative than those after the crisis because managers have greater incentives to convey more positive news. However, we find that Big 4 auditees are more sensitive to bad news than non-Big 4 auditees, consistent with Big 4 auditors having higher risk from audit litigation and reputation loss, especially during the crisis period. In the post-crisis period, both Big 4 and non-Big 4 auditees report more earnings conservatism to the market. Most interestingly, we find no significant difference in conservatism between Big 4 and Non-Big 4 auditors. The possible explanations can be referred to the serious adoption of IASs, the stringent control of regulatory bodies, the self-adjustment of auditors, and the improvement in corporate governance in Thailand.

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