Purpose – Japanese audit market experienced a significant shift from the Big 4 dominated the audit market to the Big 3 market due to the demise of PwC ChuoAoyama in 2006 that raised concern on compromised auditor's independence. This study aims to investigate whether Japanese auditors engage...

This study examines whether and how the Big 3 audit firms in Japan respond to clients' business risk and whether their responses vary. Two possible approaches to addressing clients' higher business risk are increasing audit effort (e.g., increasing total audit hours or assigning more experienced...