Internal and External Social Capital of Big 4 Audit Offices

SUMMARY: This study investigates the impact of social capital within and outside Big 4 audit offices on audit quality. We find that higher levels of internal and external social capital correlate with improved audit quality, indicating that social capital functions as a bond and a bridge in enhancing auditor performance. Additional analysis suggests that audit-office social capital also helps enhance audit efficiency. Furthermore, we examine the interaction between internal and external social capital, revealing that increased external social capital in audit offices with strong internal social capital is associated with higher audit quality. Our research provides valuable insights for audit offices aiming to optimize their performance outcomes effectively.