Theories of audit quality hypothesize higher quality audits associated with larger audit firms. The relationship between size and quality is derived from DeAngelo (1981) which is widely cited in the literature as the basis for pooling big and small auditors when testing for audit quality...

Audit quality can be defined as relating to the probability that financial statements contain no material omissions or misstatements. Previous research on the subject of audit quality relies on the assumption that large audit firms (Big 4) are homogenous in providing higher audit quality than...