Contemporary Accounting Research最新文献

In recent years, the Big 4 firms have embarked on digital transformation projects that have the potential to throw auditors' daily practice into turmoil. This study looks at the auditors' quest for professional security—namely, their confidence in the fundamental features of their profession. Specifically, we investigate how auditors, when construing their experiences in a firm engaged in a digital transformation project promoting automation of a significant portion of their work, seek to preserve their sense of professional security. Interviews with auditors indicate that, in contrast to the high professional insecurity caused by the commercialization of auditing in the early 2000s, the digital transformation of the profession ultimately strengthened auditors' professional security. Over time, the interviewees became receptive to the firm-promoted label of tech-savvy auditor and subscribed to the technological complementarity thesis, which sees closer “collaboration” with technology as enhancing the auditor's work rather than replacing, undermining, or enslaving the auditor. Three implications are discussed. First, our study casts doubt on auditors' romanticized view of the technological complementarity thesis in light of economic and socio-organizational theories about the automation of work. These theories lead us to question the auditors' belief that they will retain their professional autonomy. Second, according to our analyses, one key explanation for auditors' high level of professional security is that digital transformation projects surrounding the audit function are part of a continuing and reassuring trajectory of commercialization within accountancy. Third, our findings suggest that digital transformation projects act as vehicles for identity development, allowing the tech-savvy auditor to escape the shameful stereotypes ascribed to the traditional auditor—that is, an auditor who manually performs most of the mundane tasks required to complete an audit.

We present a case illustrating the pitfalls of insufficient disclosure of commercial databases' coding policies. We replicate the finding in the literature that a nontrivial percentage of firms mandated to adopt IFRS ignore this obligation. Specifically, Pownall and Wieczynska (2018, Contemporary Accounting Research, 35(2), 1029–1066) report more than 3,000 cases, or 10% of all mandated firms in the European Union. When using primary data sources (applicable local regulations and firms' annual reports), we find that noncompliance with IFRS adoption is nonexistent in the one-to-one replication using the same firm-year observations. We attribute the prior misperception to the commercial database's insufficient disclosure of a misleading coding policy of the consolidation item. We also show that no other data provider correctly captures consolidation status, which determines whether firms must report under IFRS. In response to this gap, we showcase the application of bidirectional encoder representations from transformers (BERT) models for extracting the consolidation status and offer guidance for coding IFRS-mandated firms. Our article underscores the need to exercise caution when using secondary data sources.

Prior research documents that mergers and acquisitions result in significant financial reporting risks. In this article, we examine whether acquirers that share a common auditor with the target experience higher post-acquisition financial reporting quality (FRQ) and reduced audit fees. We find that same-office, but not different-office, common auditors are associated with improved post-acquisition FRQ, as evidenced by a decreased likelihood of misstatement, lower F-score, and a lower likelihood of meeting or just beating analyst forecasts. We also find that same-office common auditors are associated with a lower percentage change in audit fees. In additional tests, we find that these inferences are robust to limiting the sample to acquirers with multiple acquisitions or to acquirers and targets with no auditor switches in the prior 3 years. Together, our findings suggest that same-office common auditors facilitate knowledge transfer about the target and provide important post-acquisition benefits.

Beginning May 1, 2020, with the strong support of our team of Editors, CAR implemented a reviewer recognition program. The purpose of the program is to annually recognize reviewers, nominated by the Editors, who regularly perform exceptionally high-quality and timely reviews. CAR has a long-standing tradition of providing thoughtful and constructive reviews, so to receive recognition under this program is a very noteworthy accomplishment. Of the 879 individuals who submitted high-quality reviews from June 1, 2024, to June 1, 2025, the 13 listed below were selected by the Editors as being especially worthy of receiving recognition. Congratulations and thank you to each of them!

En date du 1^er mai 2020, grâce au solide soutien de son équipe de rédacteurs, RCC a mis en œuvre un programme de reconnaissance des réviseurs. Ce programme vise à souligner annuellement la contribution de réviseurs, nommés par les rédacteurs, qui effectuent régulièrement des révisions de qualité exceptionnelle dans les délais impartis. En regard de la longue tradition de RCC en matière de production de révisions judicieuses et constructives, le fait d'être reconnu dans le cadre de ce programme est un accomplissement remarquable. Parmi les 879 personnes qui ont soumis des révisions de grande qualité entre le 1^er juin 2024 et le 1^er juin 2025, les rédacteurs ont jugé que l'apport des 13 personnes énumérées ci-dessous méritait tout particulièrement d'être souligné. Félicitations et merci à chacun de vous!

• Musaib Ashraf, Michigan State University

• Matt Bamber, York University

• Michael Drake, Brigham Young University

• June Huang, University of Texas at Dallas

• Michael Jung, University of Delaware

• Kevin Li, Santa Clara University

• Xiaotao (Kelvin) Liu, Northeastern University

• Federico Siano, University of Texas Dallas

• Blake Steenhoven, Queen's University

• Sarah Stein, Virginia Tech

• Mary Vernon, University of Illinois Chicago

• Joshua White, Vanderbilt University and PCAOB

• Ryan Wilson, University of Iowa

Prior research has established that tax liability increases lead to decreased compliance. However, tax liability changes do not happen in a vacuum. Notably, prior research has also identified a withholding phenomenon: individuals in a tax due position are less compliant than those in a refund position. Additionally, tax law changes are often enacted in politically polarized environments. We examine how three factors—tax liability changes, withholding position, and group affiliation—combine to influence individuals' tax compliance decisions. Our experimental results show that a tax increase is universally experienced as a loss, even when coupled with a tax refund and enacted by an ingroup, leading to decreased compliance. However, a tax decrease coupled with a tax due position is viewed neutrally and leads to less compliance than a tax decrease coupled with a tax refund. Further, group affiliation influences compliance in some situations. Individuals in a tax due position are less compliant when an outgroup, versus an ingroup, is responsible for the tax change. This study contributes to the mental accounting literature by examining how individuals react to mixed gain/loss situations when the gains and losses are of different types. We also integrate the previous separate research streams on the withholding phenomenon and tax liability changes. Practically, our results contribute to tax policy by showing how individuals react when tax law changes are enacted. Importantly, even when a tax change results in a decrease in tax liability, tax compliance may be affected by individuals' withholding position and group affiliation.

In this paper, I examine the effects of failed mergers and acquisitions (M&A) deals on firms' disclosure decisions. As a firm's detailed proprietary information is shared with the counterparty during an M&A deal, the value of the information is expected to decrease if the deal fails. As a result, it may become less costly for the firm to publicly disclose the information. Consistent with this reasoning, I find increased disclosure of proprietary information in the year after firms experience failed deals. Evidence from cross-sectional tests and a quasi-natural experiment strengthens this inference. I also show that investor information demand contributes to the increased disclosure of proprietary information after failed deals. In addition, consistent with an increase in proprietary information provided to investors, I find reduced information asymmetry after failed deals. Finally, I document diminished future performance among firms that increase the disclosure of proprietary information after failed deals. Overall, my study sheds light on how failed deals impact firms' disclosure decisions, information environment, and future performance.

How do global firms manage conflicting constituencies in complex markets? The Big 4 accounting firms have expanded their size and scope to the extent that they need to relate to different constituencies simultaneously, sometimes on controversial issues. This is particularly relevant given their engagement in aggressive tax planning services alongside their traditional professional obligations, as this generates a conflict between discretion offered to “offshore” clients and accountability offered to other stakeholders. This requires strategic duplicity—sending differentiated signals to different stakeholders. We suggest that firms use organizational partitioning across legal structures and geographies to enable strategic duplicity. We test this by collecting a unique data set on the Big 4's ownership structures and staff numbers across all locations, showing that their organizations are heavily segmented. We show that the Big 4 use this geographical and legal differentiation to send contrasting signals to constituents about their organizations, engaging in a type of strategic duplicity that we term transparency arbitrage, in which “onshore” stakeholders receive a signal of transparency and “offshore” stakeholders receive a signal of discretion. This duality enables them to engage in controversial issues with conflicting stakeholders.

A significant challenge firms face is providing performance feedback that effectively motivates low-performing employees. In our field experiment, we examine the impact of an often-overlooked form of relative performance feedback (RPF) that emphasizes comparing employees based on their inputs. Our results indicate that input-based RPF enhances the input performance of low performers without adversely affecting high performers. Furthermore, our field experiment demonstrates that selecting the right input—specifically, actions that employees can control and that are linked to outputs—can significantly boost low performers' contributions to a firm's overall output. Together, our findings support our prediction that input-based RPF provides a viable strategy for low performers to narrow the performance gap with high performers by guiding them toward the crucial inputs that high performers use to generate output. Our study adds an important refinement to our understanding of how RPF promotes upward social comparison and facilitates social learning, offering insights for firms aiming to motivate low performers in their workforce.

In this study, we examine whether environmental, social, and governance (ESG) funds' investment decisions are sensitive to the existence and extent of firms' voluntary environmental disclosures. We create our measures of voluntary environmental disclosure using bigrams extracted from the Global Reporting Initiative standards. We provide robust evidence that voluntary environmental disclosure in conference calls is associated with greater ESG fund ownership in the subsequent period, incremental to firms' ESG ratings. We also provide evidence that fund managers' reliance on environmental disclosure is concentrated in water, waste, emissions, and compliance disclosures. ESG fund ownership increases with environmental disclosure that is more positive and specific. Our primary finding persists both when we rely on the sustainability report as an alternative proxy for environmental disclosure and when we use fund-level tests. Overall, our evidence is consistent with ESG funds relying on firms' disclosures when making investing decisions and inconsistent with recent regulatory concerns that ESG fund managers are not following through on their stated investing strategies.

This study provides empirical evidence that key audit matters (KAMs) are informative for future negative accounting outcomes. We employ FinBERT—a deep learning model designed for natural language processing that allows human-like text comprehension—to demonstrate that goodwill-related KAMs are predictive of firms' future impairments. Our findings reveal that utilizing KAMs as a stand-alone predictor for future impairments provides meaningful predictive power. By exploring the semantic content of reported KAMs, we find that their predictive power is primarily driven by text passages covering how both the firm and the auditor exercise judgment in the accounting and auditing of goodwill. Furthermore, we show that KAMs are incrementally predictive beyond several firm-level determinants and disclosures in annual reports. Finally, our additional analyses indicate that (1) KAM-predicted impairment probabilities are relevant to capital markets, (2) KAMs are useful for predicting the magnitude of goodwill impairments, and (3) the predictive power extends to other KAM topics. Collectively, our findings enhance the understanding of the informational content of KAMs, which is a key rationale for their introduction.