Miscodings in Compustat's Auditor Variable: Issues, Identification, and Correction

21 Pages Posted: 23 Jul 2017  

Steven Utke

University of Connecticut - Department of Accounting

Date Written: July 10, 2018

Abstract

Using an easily implementable methodology for identifying potential data errors, I identify and correct cases where Compustat miscodes the auditor variable. In this paper, I present the methodology and provide SAS code that implements the methodology, enabling researchers to easily identify and correct auditor miscodings. Further, I provide a list of corrections for a sample of Compustat firms from 2001 to 2014. Auditor variable miscodings have implications for both audit-specific research as well as general capital markets research. I find that in some cases, miscodings arise from the fact that, following an auditor change, the previous auditor’s report remains in a firm’s 10-K, and Compustat occasionally codes the previous auditor as the current auditor. Aside from identifying and correcting miscodings, I also find that a non-zero number of firms change to a new auditor and then, after only one year with the new auditor, switch back to the prior auditor.

Keywords: Auditor changes, Auditor tenure, Industry specialization, Big 4, Data integrity, Compustat

JEL Classification: M40

Suggested Citation

Utke, Steven, Miscodings in Compustat's Auditor Variable: Issues, Identification, and Correction (July 10, 2018). Available at SSRN: https://ssrn.com/abstract=3006667 or http://dx.doi.org/10.2139/ssrn.3006667

Steven Utke (Contact Author)

University of Connecticut - Department of Accounting ( email )

School of Business
Storrs, CT 06269-2041
United States

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