Table 7 Earnings quality for private...

Table 7

Earnings quality for private subsidiary firms versus standalone firms (Big 4 versus non-Big 4)

Variables	(1)	(2)
Variables	ABSDTA	ABSWCA
Subs	0.005**	0.005
Subs	(0.002)	(0.004)
SubsBig4*	0.006*	0.006
SubsBig4*	(0.003)	(0.006)
Capneed	0.000***	0.000***
Capneed	(0.000)	(0.000)
Size	−0.005***	−0.009***
Size	(0.000)	(0.001)
ROE	0.000	−0.000
ROE	(0.000)	(0.000)
Loss	0.000***	0.001***
Loss	(0.000)	(0.000)
Std_ROA	0.000**	0.000**
Std_ROA	(0.000)	(0.000)
Lev	−0.012***	−0.021***
Lev	(0.003)	(0.004)
Growth	0.000*	0.000***
Growth	(0.000)	(0.000)
Inv	−0.042***	−0.014*
Inv	(0.003)	(0.007)
Constant	0.224***	0.155***
	(0.004)	(0.005)
Year FE	Yes	Yes
Industry FE	Yes	Yes
Observations	66,823	55,129
R-squared	0.074	0.083

Variables	(1)	(2)
Variables	ABSDTA	ABSWCA
Subs	0.005**	0.005
Subs	(0.002)	(0.004)
Subs*Big4	0.006*	0.006
Subs*Big4	(0.003)	(0.006)
Capneed	0.000***	0.000***
Capneed	(0.000)	(0.000)
Size	−0.005***	−0.009***
Size	(0.000)	(0.001)
ROE	0.000	−0.000
ROE	(0.000)	(0.000)
Loss	0.000***	0.001***
Loss	(0.000)	(0.000)
Std_ROA	0.000**	0.000**
Std_ROA	(0.000)	(0.000)
Lev	−0.012***	−0.021***
Lev	(0.003)	(0.004)
Growth	0.000*	0.000***
Growth	(0.000)	(0.000)
Inv	−0.042***	−0.014*
Inv	(0.003)	(0.007)
Constant	0.224***	0.155***
	(0.004)	(0.005)
Year FE	Yes	Yes
Industry FE	Yes	Yes
Observations	66,823	55,129
R-squared	0.074	0.083

Note(s): Subs is an indicator variable for private subsidiary firms. Big 4 is a dummy variable that equals one when the parent firm of the subsidiary is audited by Big 4 affiliates. Please see Appendix 1 for detailed variable definitions. All continuous variables are winsorized at the 1st and 99th percentiles. The symbol ***, ** and * denote significance at 1, 5 and 10% levels, respectively. Robust standard errors (clustered at the firm level) are reported in the parentheses

Source(s): Table created by authors'

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