The International Journal of Accounting最新文献

Regulators suggest that small audit firms join international accounting networks to reduce their resource constraints in serving large clients and providing high-quality service. Bills, Cunningham, and Myers (2016) investigate the issue in the United States and find that both audit fees and quality are higher for members of international accounting networks (i.e., member audit firms). We investigate the effects of network membership on audit fees and quality in China, a relatively weaker institutional environment than the United States. Using data of Chinese listed companies audited by non-Big N audit firms from 2001 to 2010, we find that member audit firms charge 3.9% higher fees than nonmember audit firms, much lower than the 30% fee premiums charged by U.S. member audit firms. We do not find consistent evidence that audit quality is higher for member audit firms. Overall, our results demonstrate that China's weak institutional environment may overwhelm the quality control brought by international accounting networks and that it may weaken or even offset the benefits of audit firms' participation in these networks, resulting in smaller or even no effects of membership on audit fees and quality.

Luft and Libby (1997) posit that American transfer price negotiators tend to settle on prices that result in smaller differences in profit between divisions than the external market price will dictate. They attribute the results to a fairness effect. While fairness is present in all cultures, what is considered “fair” differs between cultures (Bian & Keller, 1999; Bolton et al., 2009; Gao, 2009; Surowiecki, 2009). This study ascertains whether cultural affiliation of the negotiator impacts this fairness effect. American and Chinese subjects participated in within-culture and cross-cultural negotiations in an experiment modeled after Luft and Libby (1997). Our results confirm Luft and Libby's (1997) fairness effect when American participants negotiate with each other, but illustrate a contrary effect when Chinese participants negotiate with each other. The negotiator's cultural affiliation is found to determine profit distribution in cross-cultural negotiations. These findings are consistent with longstanding theories of cultural traits (Hofstede, 1980) that are relevant to transfer price negotiation activities. Our results imply that the fairness effect in transfer price negotiation may need to be refined to account for the impact of culture.

On May 27, 2014, Regulation (EU) No 537/2014 was published in the Official Journal of the European Union. Aiming to enhance audit quality, the new regulation establishes important limitations to the selling of non-audit services by the audit firm to audit clients and a maximum tenure of ten years with the audit firm. However, it should be noted that the extant research has not consistently supported that non-audit services or long tenures impair the quality of audits. This research studies whether these provisions have been empirically associated with reduced audit quality for Spain. Because of its low litigation risk, the potentially negative impact of both non-audit services and tenure on audit quality should be clearly observed in the Spanish audit market. Nevertheless, we do not find significantly lower levels of audit quality associated with either non-audit services or long audit tenures. However, these results are conditional on the validity of using abnormal accruals to measure audit quality.