<![CDATA[The broad aim of this study is to compare real earnings management (REM) between firms audited by Big 4 firms and those audited by non-Big 4 firms in Sub-Saharan Africa. The research design is an ex post facto design. The final sample comprises 230 firm-year observations from three Sub-Saharan African countries, namely Malawi, Nigeria, and Tanzania. Secondary data were drawn from annual reports and financial statements downloaded from the Machame Ratios database. The analysis employed multiple regression techniques, with diagnostic tests such as the Variance Inflation Factor (VIF) and the Hausman test to ensure result stability. Findings indicate a negative effect of both Big 4 and non-Big 4 audited firms on the quality of abnormal operating cash flow. The second hypothesis reveals a positive effect of Big 4 and non-Big 4 auditors on the quality of abnormal production expenditure (APE). The third hypothesis shows a negative effect on the quality of abnormal discretionary expenditure (ADE). Additionally, the study used an alternative REM proxy that sums AOCF, APE, and ADE, in line with prior studies. Results with the alternative REM proxy also confirm a negative effect of Big 4 on REM. Based on these findings, the study recommends several actions: auditors should exercise caution because, despite greater financial reporting transparency brought about by the switch to IFRS, managers still have opportunities to manipulate earnings in other ways. Managers should consider an audit firm’s industry specialization when hiring.]]>
