Andersen’s Tolerance Toward Aggressive Financial Reporting: Are They Different?

Abstract

Over the last two years, the public press has expressed differing views on whether the demise of Arthur Andersen is an anomaly or a systematic problem in the profession. Some authors have asserted that Arthur Andersen was a firm somehow different than the other Big Five accounting firms while others in the public press believe that the failure of Andersen is the outcome of a systematic problem in the accounting profession. In this study, I examine whether there is a difference between the tolerance of Arthur Andersen and the tolerance of the other Big Five accounting firms toward aggressive financial reporting. I find that there is no difference between the tolerance of Arthur Andersen and the tolerance of the other Big Five accounting firms toward aggressive financial reporting.