【文章內容簡介】 er time is crucial for maintaining qualitypremiums(., Klein and Leffler 1981。Kreps and Wilson 1982。Shapiro 1983).Similarly, ourevidence suggests that large, Big 4 auditors should take care to maintain a similar level of auditquality across offices of different sizes because a systematically poorquality audit service performed by a local office could potentially cause damage to the reputation for the entire audit DEVELOPMENT Office Size and Audit Quality A growing body of audit research emphasizes the importance of analyzing the behavior ofauditors in citybased, local engagement , none of these studies has paid attention to the size of a local office in the context of audit does the office size matter inaudit quality over and beyond two wellknown audit firm characteristics, ., audit firm size orbrand name(Big 4 versus nonBig 4)and industry expertise? In DeAngelo’s(1981b)framework, an auditor’s incentive to promise audit quality withrespect to a particular client depends on the economic importance of the client relative to theauditor’s client analysis indicates that large auditors are likely to provide higherquality audit services to a particular client than small auditors because an auditor’s economicdependence on that client is negligible for large auditors, and large auditors have more to lose(.,bear higher reputation loss)in case of audit failures, pared with small ’s(1981b)theory can also be applied to the analysis of audit quality differentiationbetween large versus small offices, because a local engagement office can be viewed as a semiautonomous unit in terms of its audit decisions, client base, revenue sources, and other factors(Francis 2004。Francis et 。Wallman 1996).Large local offices are less likely to depend ona particular client than small local offices because the former have deeper officelevel clientelesand thus are less economically dependent on a particular other words, large offices areless likely to acquiesce to client pressure for substandard reporting than small , local offices, whether small or large, may not bear the full amount of reputationlosses associated with an audit failure because a substantial portion of the reputation losses arelikely borne by the nationallevel audit firm the reputation losses in the event of auditfailures are likely to be greater for large audit firms(DeAngelo1981b), the losses are not necessarily greater for large local offices than for small local offices, because these costs are morefirmwide in nature rather than means that local offices may be more concerned with the economic importance of a particular client than a potential litigation risk fromaudit failures, in particular, when the offices are small in above arguments lead us topredict that large local offices with relatively deep local clienteles are less likely to promise audit quality with respect to a particular client, and thus that they are likely to provide higherquality audit services, ceteris paribus, pared with small local offices with relatively thin such a case, one would observe a positive association between office size and call this prediction the economic dependence AND CONCLUDING REMARKS While previous auditing research has examined whether and how audit fees and audit qualityare influenced by audit firm size at the national level and auditor industry leadership at both thenational level and the city level, this line of research has paid little attention to the effect of thesize of a local engagement office within an audit firm(., office size)in the context of auditquality and audit previous research, the focus of this paper is on whether the officesize is an additional, engagementspecific factor determining audit quality and audit pricing overand beyond nationallevel audit firm size and officelevel industry results can besummarized as , we find that the office size is positively associated with audit quality proxied by unsigned abnormal finding is consistent with what we call the economic dependenceperspective: large(small)local offices with deep officelevel clienteles are less(more)likely to depend on a particular client, and thus are better(less)able to resist client pressure on substandardor biased , we find that large local offices are able to charge higher audit fees totheir clients than small ones, which is consistent with the view that large offices provide higherquality audits than small offices, and this quality differential is priced as a fee premium in themarket for audit , the above finding is at odds with the view that large officeshave a cost advantage in producing audit services of similar quality and thus are able to chargelower billing rates pared with small together, our results highlight that officesize is one of the most important engagementspecific determinants of audit quality and , while we use two alternative, advanced accrual models to alleviate a concern overthe limitations inherent in the Jones(1991)model estimates of abnormal accruals, our measures ofaudit quality, namely unsigned abnormal accruals, may suffer from nontrivial measurement therefore cannot pletely rule out the possibility that the estimated coefficients on our testvariables are , given that a contemporaneous study of Francis and Yu(2009)documents the same positive association between audit quality and audit office size using twoadditional proxies for audit quality, ., auditors’ tendency to issue goingconcern opinion andclient firms’ likelihood to meet earnings benchmarks, we believe that our results are unlikelydriven by possible measurement , our results suggest that both regulators and audit firms should pay more attention tothe behavior of small offices because they are more likely to be economically dependent on aparticular client, and thus to promise audit particular, Big 4 audit firms may need t