Jeffrey L. Callen, Xiaohua Fang, Baohua Xin, Wenjun Zhang
This study examines the association between the office size of engagement auditors and their clients' future stock price crash risk, a consequence of managerial bad news hoarding. Using a sample of...
{"title":"Capital Market Consequences of Audit Office Size: Evidence from Stock Price Crash Risk","authors":"Jeffrey L. Callen, Xiaohua Fang, Baohua Xin, Wenjun Zhang","doi":"10.2308/ajpt-18-015","DOIUrl":"https://doi.org/10.2308/ajpt-18-015","url":null,"abstract":"This study examines the association between the office size of engagement auditors and their clients' future stock price crash risk, a consequence of managerial bad news hoarding. Using a sample of...","PeriodicalId":48142,"journal":{"name":"Auditing-A Journal of Practice & Theory","volume":"5 1","pages":"1-26"},"PeriodicalIF":2.8,"publicationDate":"2020-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"73042020","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
I examine whether terrorism or the risk of future terrorism affects audit fees paid by companies around the world. In the existing audit fee literature, it is unclear how terrorism risk enters the theoretical framework for audit fees. Using both a levels analysis and a changes analysis, I find a positive association between higher levels and higher increases in terrorism risk and increased audit fees. The positive association between audit fees and terrorism risk is strengthened in environments with greater litigation risk, i.e., in which the firm has a greater probability of corporate litigation, the firm is headquartered in a country with greater investor protections, or the firm is headquartered in a country that allows shareholders greater ease in filing a shareholder lawsuit. From these results, I conclude that auditors include the country-level terrorism risk in their pricing of audit fees.
{"title":"Audit Pricing of Terrorism","authors":"William J. Moser","doi":"10.2308/ajpt-52595","DOIUrl":"https://doi.org/10.2308/ajpt-52595","url":null,"abstract":"\u0000 I examine whether terrorism or the risk of future terrorism affects audit fees paid by companies around the world. In the existing audit fee literature, it is unclear how terrorism risk enters the theoretical framework for audit fees. Using both a levels analysis and a changes analysis, I find a positive association between higher levels and higher increases in terrorism risk and increased audit fees. The positive association between audit fees and terrorism risk is strengthened in environments with greater litigation risk, i.e., in which the firm has a greater probability of corporate litigation, the firm is headquartered in a country with greater investor protections, or the firm is headquartered in a country that allows shareholders greater ease in filing a shareholder lawsuit. From these results, I conclude that auditors include the country-level terrorism risk in their pricing of audit fees.","PeriodicalId":48142,"journal":{"name":"Auditing-A Journal of Practice & Theory","volume":"1 1","pages":""},"PeriodicalIF":2.8,"publicationDate":"2020-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"86612287","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Scandals discovered in New York school districts resulted in two legislative acts designed to improve internal control systems and independent audit quality within the State's school district audit market. The legislation requires that audits be awarded through a formal requisitioning process (RFP), including optional rotation, every five years. The Office of the New York State Comptroller auditors also began performing internal control inspections at school districts and performing audit quality inspections of independent auditors. Post-regulation, the audit market became more concentrated, with greater usage of specialist audit firms and fewer small firms. Audit fees and audit report lag increased substantially and specialist auditors began earning a fee premium. We also find a significant increase in internal control exceptions reported by New York school districts and variation in the reporting of control deficiencies by auditor type.
{"title":"The Introduction of State Regulation and Auditor Retendering in School Districts: Local Audit Market Structure, Audit Pricing, and Internal Controls Reporting","authors":"Randal J. Elder, Alfred A. Yebba","doi":"10.2308/ajpt-52596","DOIUrl":"https://doi.org/10.2308/ajpt-52596","url":null,"abstract":"\u0000 Scandals discovered in New York school districts resulted in two legislative acts designed to improve internal control systems and independent audit quality within the State's school district audit market. The legislation requires that audits be awarded through a formal requisitioning process (RFP), including optional rotation, every five years. The Office of the New York State Comptroller auditors also began performing internal control inspections at school districts and performing audit quality inspections of independent auditors. Post-regulation, the audit market became more concentrated, with greater usage of specialist audit firms and fewer small firms. Audit fees and audit report lag increased substantially and specialist auditors began earning a fee premium. We also find a significant increase in internal control exceptions reported by New York school districts and variation in the reporting of control deficiencies by auditor type.","PeriodicalId":48142,"journal":{"name":"Auditing-A Journal of Practice & Theory","volume":"74 1","pages":""},"PeriodicalIF":2.8,"publicationDate":"2020-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"83734367","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper examines the effect of knowledge sharing in audit firms on audit quality and efficiency. We analyze data from a survey of audit professionals from 22 audit firms in Taiwan matched to publicly available data on individual audits conducted by those firms. The results indicate that knowledge sharing within an audit firm is positively associated with audit quality as manifested in lower absolute discretionary accruals and the issuance of more unfavorable audit opinions. We also find that knowledge sharing within audit firms is associated with higher audit efficiency as represented by shorter audit lags. More importantly, we find that both higher audit quality and audit efficiency are simultaneously associated with higher levels of knowledge sharing, suggesting that effective knowledge sharing may help to improve both audit quality and audit efficiency. Given the regulatory changes to enhance both audit quality and audit timeliness, these findings have implications for audit firms. Data Availability: Data used in this study are available from public sources. Survey data are available upon request.
{"title":"The Effects of Audit Firms' Knowledge Sharing on Audit Quality and Efficiency","authors":"Rong-Ruey Duh, W. Knechel, Ching-Chieh Lin","doi":"10.2308/ajpt-52597","DOIUrl":"https://doi.org/10.2308/ajpt-52597","url":null,"abstract":"\u0000 This paper examines the effect of knowledge sharing in audit firms on audit quality and efficiency. We analyze data from a survey of audit professionals from 22 audit firms in Taiwan matched to publicly available data on individual audits conducted by those firms. The results indicate that knowledge sharing within an audit firm is positively associated with audit quality as manifested in lower absolute discretionary accruals and the issuance of more unfavorable audit opinions. We also find that knowledge sharing within audit firms is associated with higher audit efficiency as represented by shorter audit lags. More importantly, we find that both higher audit quality and audit efficiency are simultaneously associated with higher levels of knowledge sharing, suggesting that effective knowledge sharing may help to improve both audit quality and audit efficiency. Given the regulatory changes to enhance both audit quality and audit timeliness, these findings have implications for audit firms.\u0000 Data Availability: Data used in this study are available from public sources. Survey data are available upon request.","PeriodicalId":48142,"journal":{"name":"Auditing-A Journal of Practice & Theory","volume":"42 1","pages":""},"PeriodicalIF":2.8,"publicationDate":"2020-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"89977778","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Marcus M. Doxey, Richard C. Hatfield, Jordan A. Rippy, R. Peel
We broaden our understanding of investor materiality, finding it to be asymmetrical for good and bad news. Motivated by legal and standards-based materiality definitions, we consider both participants' stated materiality limits and investment judgments, as well as the effect of auditors' materiality disclosures on those judgments. The study employs a 3 × 2 experiment manipulating materiality disclosure (high or low materiality number or no disclosure) and gain or loss subsequent events of equal magnitude. Absent disclosure, non-professional investors report lower materiality thresholds than typical auditor limits, and they exhibit lower materiality levels for bad news relative to good news both in their stated preferences and investment decisions. We find that disclosure reduces the distance between user and auditor materiality and eliminates the asymmetry in investors' stated materiality levels. However, disclosure fails to attenuate asymmetry in investment decisions, suggesting materiality preferences are “sticky” and difficult to affect through disclosure.
{"title":"Asymmetric Investor Materiality and the Effects of Disclosure","authors":"Marcus M. Doxey, Richard C. Hatfield, Jordan A. Rippy, R. Peel","doi":"10.2308/ajpt-18-032","DOIUrl":"https://doi.org/10.2308/ajpt-18-032","url":null,"abstract":"\u0000 We broaden our understanding of investor materiality, finding it to be asymmetrical for good and bad news. Motivated by legal and standards-based materiality definitions, we consider both participants' stated materiality limits and investment judgments, as well as the effect of auditors' materiality disclosures on those judgments. The study employs a 3 × 2 experiment manipulating materiality disclosure (high or low materiality number or no disclosure) and gain or loss subsequent events of equal magnitude. Absent disclosure, non-professional investors report lower materiality thresholds than typical auditor limits, and they exhibit lower materiality levels for bad news relative to good news both in their stated preferences and investment decisions. We find that disclosure reduces the distance between user and auditor materiality and eliminates the asymmetry in investors' stated materiality levels. However, disclosure fails to attenuate asymmetry in investment decisions, suggesting materiality preferences are “sticky” and difficult to affect through disclosure.","PeriodicalId":48142,"journal":{"name":"Auditing-A Journal of Practice & Theory","volume":"133 1","pages":""},"PeriodicalIF":2.8,"publicationDate":"2020-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"77413823","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
D. Sharma, Vineeta D. Sharma, Paul N. Tanyi, Xiaoyan Cheng
We find a significant negative association between cost of equity and audit committee directors' simultaneous service on multiple audit committees (ACNUM). However, this association is not linear, as we find that cost of equity begins to increase when ACNUM is 1.50 for non-retired directors compared to 3.50 for retired directors. Further analyses reveal the negative association is more pronounced when a firm's information environment is strong and widely used firm-level measures of multiple directorships are not related to cost of equity. The evidence we present is consistent with the notion that investors positively perceive audit committee directors' service on multiple audit committees, but only to the extent such service does not undermine directors' ability to effectively discharge their governance responsibilities. Our study informs policymakers, boards, and nominating committees and advances the literature on multiple directorships, audit committees, and cost of equity. JEL Classifications: G12; G14; M40; M41. Data Availability: All data are publicly available from sources identified in the text.
{"title":"Should Audit Committee Directors Serve on Multiple Audit Committees? Evidence from Cost of Equity Capital","authors":"D. Sharma, Vineeta D. Sharma, Paul N. Tanyi, Xiaoyan Cheng","doi":"10.2308/ajpt-17-117","DOIUrl":"https://doi.org/10.2308/ajpt-17-117","url":null,"abstract":"\u0000 We find a significant negative association between cost of equity and audit committee directors' simultaneous service on multiple audit committees (ACNUM). However, this association is not linear, as we find that cost of equity begins to increase when ACNUM is 1.50 for non-retired directors compared to 3.50 for retired directors. Further analyses reveal the negative association is more pronounced when a firm's information environment is strong and widely used firm-level measures of multiple directorships are not related to cost of equity. The evidence we present is consistent with the notion that investors positively perceive audit committee directors' service on multiple audit committees, but only to the extent such service does not undermine directors' ability to effectively discharge their governance responsibilities. Our study informs policymakers, boards, and nominating committees and advances the literature on multiple directorships, audit committees, and cost of equity.\u0000 JEL Classifications: G12; G14; M40; M41.\u0000 Data Availability: All data are publicly available from sources identified in the text.","PeriodicalId":48142,"journal":{"name":"Auditing-A Journal of Practice & Theory","volume":"18 1","pages":""},"PeriodicalIF":2.8,"publicationDate":"2020-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"83786359","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Existing research has found that the PCAOB inspection results of small (triennially inspected) audit firms provide incremental information about audit quality, but research has not documented a sim...
{"title":"Risky Business: Assessing the Generalizability of the PCAOB's Risk-Based Inspection Reports for Annually Inspected Audit Firms","authors":"Jared Eutsler","doi":"10.2308/ajpt-18-122","DOIUrl":"https://doi.org/10.2308/ajpt-18-122","url":null,"abstract":"Existing research has found that the PCAOB inspection results of small (triennially inspected) audit firms provide incremental information about audit quality, but research has not documented a sim...","PeriodicalId":48142,"journal":{"name":"Auditing-A Journal of Practice & Theory","volume":"143 1","pages":"117-138"},"PeriodicalIF":2.8,"publicationDate":"2020-02-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"86186205","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
SUMMARY The Public Company Accounting Oversight Board (PCAOB) has expressed concern that audit reports do not contain sufficient variation to provide useful information to the market. Using a sampl...
{"title":"The Effects of the Type and Content of Audit Reports for Financially Stressed Initial Public Offerings on Information Uncertainty","authors":"S. Kaplan, Gary K. Taylor, David D. Williams","doi":"10.2308/ajpt-52561","DOIUrl":"https://doi.org/10.2308/ajpt-52561","url":null,"abstract":"SUMMARY The Public Company Accounting Oversight Board (PCAOB) has expressed concern that audit reports do not contain sufficient variation to provide useful information to the market. Using a sampl...","PeriodicalId":48142,"journal":{"name":"Auditing-A Journal of Practice & Theory","volume":"372 1","pages":"125-150"},"PeriodicalIF":2.8,"publicationDate":"2020-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"77951409","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Nicholas Hallman, Andrew J. Imdieke, Kyonghee Kim, Raynolde Pereira
SUMMARY Recent research suggests that insiders of distressed firms, fearing legal jeopardy, pressure auditors not to issue going concern opinions (GCOs) for periods in which they undertake abnormal...
最近的研究表明，陷入困境的公司的内部人士，担心法律风险，迫使审计师不要在他们承担异常…
{"title":"On the Relation between Insider Trading and Going Concern Opinions","authors":"Nicholas Hallman, Andrew J. Imdieke, Kyonghee Kim, Raynolde Pereira","doi":"10.2308/ajpt-52592","DOIUrl":"https://doi.org/10.2308/ajpt-52592","url":null,"abstract":"SUMMARY Recent research suggests that insiders of distressed firms, fearing legal jeopardy, pressure auditors not to issue going concern opinions (GCOs) for periods in which they undertake abnormal...","PeriodicalId":48142,"journal":{"name":"Auditing-A Journal of Practice & Theory","volume":"50 5","pages":"43-70"},"PeriodicalIF":2.8,"publicationDate":"2020-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"72574516","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
SUMMARY While prior research has examined audit firm and audit partner rotation, we have little evidence on the impact of within-firm engagement team disruptions on the audit. To examine these disr...
{"title":"The Effect of Office Changes within Audit Firms on Clients' Audit Quality and Audit Fees","authors":"Carl W. Hollingsworth, T. L. Neal, Colin D. Reid","doi":"10.2308/ajpt-52591","DOIUrl":"https://doi.org/10.2308/ajpt-52591","url":null,"abstract":"SUMMARY While prior research has examined audit firm and audit partner rotation, we have little evidence on the impact of within-firm engagement team disruptions on the audit. To examine these disr...","PeriodicalId":48142,"journal":{"name":"Auditing-A Journal of Practice & Theory","volume":"81 1","pages":"71-99"},"PeriodicalIF":2.8,"publicationDate":"2020-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"80219595","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
京公网安备 11010802042870号
京ICP备2023020795号-1
扫码关注我们
求助内容：
应助结果提醒方式：