Changes in Big N auditors’ client selection and retention strategies over time

Daniel Aobdia, Luminita Enache, Anup Srivastava*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

3 Scopus citations


We examine changes over time in Big N auditors’ client selection and retention strategies, from 1970 to 2015, by client size and risk segments. We particularly focus on the period from 1997 to 2001, characterized by numerous tumultuous events that led to the Sarbanes–Oxley Act of 2002 (SOX). We find that Big N auditors shed en masse the smallest and riskiest clients during this tumultuous phase. Our results show that the initial impetus for the change in Big N’s client selection strategies at the dawn of the twenty-first century came from changes in the market conditions, not the demise of Arthur Andersen and the implementation of SOX, as concluded in prior literature. Those changes led to the current divide between the characteristics of Big N and non-Big N client segments that is taken for granted today. Our findings also shed light on the debate about the Big N association with audit quality. While we find existence of a Big N effect, we also find that this effect is highly correlated with, and appears and disappears with, changes in Big N’s client screening criteria.

Original languageEnglish (US)
Pages (from-to)715-754
Number of pages40
JournalReview of Quantitative Finance and Accounting
Issue number2
StatePublished - Feb 2021


  • Audit quality
  • Audit risks
  • Big N audit firms
  • Competitive structure
  • Dot-com boom and bust
  • Oligopoly
  • Public companies

ASJC Scopus subject areas

  • Accounting
  • General Business, Management and Accounting
  • Finance


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