Do you, as an investment analyst, care whether or not a reporting company uses a “brand-name” audit firm?

You answered:

• Yes: 41%    
• No: 18%
• Sometimes, depends on other variables: 34%  
• No opinion: 7%
  

Comments

I prefer non-brand.

Big four are too concerned with covering their backs to do due diligence. They choose to protect themselves over properly present financial results.

I don't even trust brand name firms.

I am working for a Brand Name audit firm.

This variable is important but not decisive.

So long as it's not [major brand-name auditor], all is well.

Yes, I do because I expect they will have a higher level of corporate governance culture within the audit firm, which will impact on their overall audit assignment and the results given by the firm and the investment decision.

A "brand name" audit firm I would expect will have access to resources to perform a thorough assessment of the reporting company's control environment (reporting process). Also, such a firm is well positioned to analyse the company relative to peers.

No. I don't see the point in spending the extra $ on a "brand name" firm. IF I can find an auditing firm which has a "no error" history and the firm is experienced, I'd go with that firm.

If a smaller company switches to lower-cost auditors that may be more efficient and cost-effective for them, would that switch to a lesser-known auditor detract from the attractiveness of the company as an investment?

You answered:

• Yes: 15%    
• No: 36%
• Uncertain, too many other considerations: 42%    
• No opinion: 7%
  

Comments

As a High Yield investor, that is often a red flag.

They would have to justify it well. Of course people will suspect they are hiding something. If you switch firm you better have a cristaline reputation and book before you do so.

Yes, It will. The auditor fees is very small as a percent to total expenses, hence changing an auditor just for cost saving will ring an alarm bell.

Get further evidence to confirm the switch based purely on business decision.

Must be a second-tier 'brand name' firm.

Move from [major brand-name auditor] is favorable.

It will ordinarily detract but the ultimate goal is to ensure that the right audit assignment is carried out and financial statements upon which investment decisions are made reflect the true view of the state of affairs of the company.

Would need to analyse in a broader context. To the extent that it is more efficient & cost effective, then fine. Otherwise I would be skeptical to invest in a company simply cutting costs.

As long as the lower-cost firm has a positive history of doing business, I don't see the need to spend the extra $ on the brand name firm.