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http://ssrn.com/abstract=468761
 
 

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Was Arthur Andersen Different? An Empirical Examination of Major Accounting Firms' Audits of Large Clients


Theodore Eisenberg


Cornell University - Law School

Jonathan R. Macey


Yale Law School

November 12, 2003

Cornell Legal Studies Research Paper No. 04-03
Yale Law & Economics Research Paper No. 287

Abstract:     
Enron and other corporate financial scandals focused attention on the accounting industry in general and on Arthur Andersen in particular. Part of the policy response to Enron, the criminal prosecution of Andersen, eliminated one of the few major audit firms capable of auditing many large, public corporations. This article explores whether Andersen's performance, as measured by frequency of financial restatements, measurably differed from that of other large auditors. Financial restatements trigger significant negative market reactions and their frequency can be viewed as a measure of accounting performance. We analyze the financial restatement activity of approximately 1,000 large, public firms from 1997 through 2001. After controlling for client size, region, time, and industry, we find no evidence that Andersen's performance significantly differed from that of other large accounting firms.

Number of Pages in PDF File: 35

JEL Classification: G30, M49, M41, K22

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Date posted: November 26, 2003  

Suggested Citation

Eisenberg, Theodore and Macey, Jonathan R., Was Arthur Andersen Different? An Empirical Examination of Major Accounting Firms' Audits of Large Clients (November 12, 2003). Cornell Legal Studies Research Paper No. 04-03; Yale Law & Economics Research Paper No. 287. Available at SSRN: http://ssrn.com/abstract=468761 or http://dx.doi.org/10.2139/ssrn.468761

Contact Information

Theodore Eisenberg
Cornell University - Law School ( email )
524 College Ave
Myron Taylor Hall
Ithaca, NY 14853
United States
607-255-6477 (Phone)
607-255-7193 (Fax)
Jonathan R. Macey (Contact Author)
Yale Law School ( email )
P.O. Box 208215
New Haven, CT 06520-8215
United States
+203-432-7913 (Phone)
+203-4871 (Fax)
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