Walton College's Liz Cowle Discusses Tracking 'Big 4' Auditing Firms' Response to Negative News

University of Arkansas / University Relations

Liz Cowle

The March episode of Short Talks From the Hill, a research podcast of the University of Arkansas, features Liz Cowle, accounting doctoral candidate the Sam M. Walton College of Business.

Last year, Cowle and research partners Caleb Rawson and Stephen Rowe, both assistant professors in the Department of Accounting, completed a major study of the so-called "Big 4" auditing firms — Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers. After examining more than 4,000 negative news articles about these firms, Cowle and her co-authors determined that the firms increased audit attention and improved audit quality when their work was covered by the media.

"We're the first study, at least to our knowledge, to highlight the importance of national news media as this effective and informal oversight body of auditing firms," Cowle says in the podcast. "…One of the most significant findings, we think, is that auditors charge up to 3 1/2 percent higher fees for every 5 percent increase in the amount of negative news about their firms, which is actually comparable to how auditors respond to inspection findings from the (Public Company Accounting Oversight Board), which is the primary oversight body of audit firms."

To listen to Cowle discuss her research, go to Research Frontiers, the home of research news at the University of Arkansas, or visit the "On Air" and "Programs" link at KUAF.com.

Short Talks From the Hill highlights research and scholarly work at the University of Arkansas. Each segment features a university researcher discussing his or her work. Previous podcasts can be found under the 'Short Talks From the Hill' link at ResearchFrontiers.uark.edu.

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