Does Big4 Audit Improve the Quality of Corporate Information, An Empirical Analysis Based on PSM

Abstract

Based on the PSM (Propensity Score Matching) approach, this paper presents a rigorous empirical argument to illustrate the statistical relationship between the audit background of the Big Four accounting firms and the quality of corporate accounting information, using a sample of all listed companies in Shanghai and Shenzhen A-shares from 2011 to 2020. This paper finds that after selecting the control and treatment groups under the PSM approach and solving the model endogeneity problem, the information quality of companies with the audit background of the Big Four accounting firms is significantly better than that of companies audited by ordinary accounting firms.