Pub Date : 2023-08-23DOI: 10.2308/horizons-2020-145
Beng Wee Goh, Na Li, Tharindra Ranasinghe
This paper investigates whether the use of Big Data analytics by firms has a spillover effect on management forecasting behavior. Insights provided by Big Data could potentially improve firms’ ability to forecast earnings (supply channel) and investor demand for earnings information is likely higher for firms engaging in data analytics (demand channel). Using a text-based measure of firms’ commitments to and usage of Big Data analytics, we find that Big Data analytics usage is positively associated with the propensity to issue management earnings forecasts. Consistent with the “supply channel” explanation, we find that Big Data analytics usage is positively associated with management forecast accuracy as well. Also, supporting the “demand channel” explanation, we find that Big Data analytics usage is associated with greater analyst following. Our findings of improved disclosure following commitments to Big Data analytics highlight a potentially unintended benefit of the Big Data revolution.
{"title":"Big Data Analytics and Management Forecasting Behavior","authors":"Beng Wee Goh, Na Li, Tharindra Ranasinghe","doi":"10.2308/horizons-2020-145","DOIUrl":"https://doi.org/10.2308/horizons-2020-145","url":null,"abstract":"\u0000 This paper investigates whether the use of Big Data analytics by firms has a spillover effect on management forecasting behavior. Insights provided by Big Data could potentially improve firms’ ability to forecast earnings (supply channel) and investor demand for earnings information is likely higher for firms engaging in data analytics (demand channel). Using a text-based measure of firms’ commitments to and usage of Big Data analytics, we find that Big Data analytics usage is positively associated with the propensity to issue management earnings forecasts. Consistent with the “supply channel” explanation, we find that Big Data analytics usage is positively associated with management forecast accuracy as well. Also, supporting the “demand channel” explanation, we find that Big Data analytics usage is associated with greater analyst following. Our findings of improved disclosure following commitments to Big Data analytics highlight a potentially unintended benefit of the Big Data revolution.","PeriodicalId":51419,"journal":{"name":"Accounting Horizons","volume":" ","pages":""},"PeriodicalIF":2.5,"publicationDate":"2023-08-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43781079","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-08-23DOI: 10.2308/horizons-2020-060
B. McAllister, Tammy R. Waymire, Thomas Z. Webb
Our study examines whether the presence of a Single Audit is positively associated with charitable donations. A Single Audit offers incremental monitoring benefits beyond a basic financial audit. Specifically, it includes additional audit procedures and publicly disclosed reporting on internal controls over financial reporting and on compliance over major programs. In an entropy-balanced sample of 44,364 observations over the period 2010 to 2016, we find that charities subject to a Single Audit receive higher donations, regardless of whether the audit reveals internal control deficiencies. We find similar results when donors are more sophisticated, but not when they are less sophisticated. Finally, our results show donors differentiate between clean and unclean audit findings when deficiencies are defined more strictly as material weaknesses only. Policymakers, charities, and other stakeholders should be interested in the finding that Single Audits, often viewed for their costs, also yield a peripheral monitoring benefit by attracting donations. Data Availability: All data are from publicly available sources quoted in the text. JEL Classifications: M41; M42; M48.
{"title":"Peripheral Benefit of Single Audit Monitoring in Attracting Charitable Donations","authors":"B. McAllister, Tammy R. Waymire, Thomas Z. Webb","doi":"10.2308/horizons-2020-060","DOIUrl":"https://doi.org/10.2308/horizons-2020-060","url":null,"abstract":"\u0000 Our study examines whether the presence of a Single Audit is positively associated with charitable donations. A Single Audit offers incremental monitoring benefits beyond a basic financial audit. Specifically, it includes additional audit procedures and publicly disclosed reporting on internal controls over financial reporting and on compliance over major programs. In an entropy-balanced sample of 44,364 observations over the period 2010 to 2016, we find that charities subject to a Single Audit receive higher donations, regardless of whether the audit reveals internal control deficiencies. We find similar results when donors are more sophisticated, but not when they are less sophisticated. Finally, our results show donors differentiate between clean and unclean audit findings when deficiencies are defined more strictly as material weaknesses only. Policymakers, charities, and other stakeholders should be interested in the finding that Single Audits, often viewed for their costs, also yield a peripheral monitoring benefit by attracting donations.\u0000 Data Availability: All data are from publicly available sources quoted in the text.\u0000 JEL Classifications: M41; M42; M48.","PeriodicalId":51419,"journal":{"name":"Accounting Horizons","volume":" ","pages":""},"PeriodicalIF":2.5,"publicationDate":"2023-08-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48546781","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-08-23DOI: 10.2308/horizons-2022-184
Dominic Detzen, A. Gold, A. Wright
Prior research suggests oversight inspections lead to unintended consequences by motivating auditors to manage inspection risk. The current study provides evidence of the impact of a misalignment between inspection and mis-statement risks at the account level, where planning decisions are made. We predict auditors feel pressures to address more immediate inspection risks at the expense of adequately responding to mis-statement risks as prescribed by auditing standards. Employing an experiment with 182 experienced auditors, we manipulate account-level inspection risk (low or high). As hypothesized, auditors plan more hours for an account with higher inspection risk and correspondingly assign fewer audit hours to other accounts with lower inspection risk, even if mis-statement risk is high for those accounts, suggesting an unwarranted shift in audit efforts. Our findings suggest inspection risks impair auditors’ effort allocation decisions and thus may undermine the audit risk model as the normative benchmark for program planning. Data Availability: Contact the corresponding author. JEL Classifications: M42; M48.
{"title":"The Impact of Account-Level Inspection Risk on Audit Program Planning Decisions","authors":"Dominic Detzen, A. Gold, A. Wright","doi":"10.2308/horizons-2022-184","DOIUrl":"https://doi.org/10.2308/horizons-2022-184","url":null,"abstract":"\u0000 Prior research suggests oversight inspections lead to unintended consequences by motivating auditors to manage inspection risk. The current study provides evidence of the impact of a misalignment between inspection and mis-statement risks at the account level, where planning decisions are made. We predict auditors feel pressures to address more immediate inspection risks at the expense of adequately responding to mis-statement risks as prescribed by auditing standards. Employing an experiment with 182 experienced auditors, we manipulate account-level inspection risk (low or high). As hypothesized, auditors plan more hours for an account with higher inspection risk and correspondingly assign fewer audit hours to other accounts with lower inspection risk, even if mis-statement risk is high for those accounts, suggesting an unwarranted shift in audit efforts. Our findings suggest inspection risks impair auditors’ effort allocation decisions and thus may undermine the audit risk model as the normative benchmark for program planning.\u0000 Data Availability: Contact the corresponding author.\u0000 JEL Classifications: M42; M48.","PeriodicalId":51419,"journal":{"name":"Accounting Horizons","volume":" ","pages":""},"PeriodicalIF":2.5,"publicationDate":"2023-08-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45336292","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-08-23DOI: 10.2308/0888-7993-37.3.i
{"title":"Covers and Front Matter","authors":"","doi":"10.2308/0888-7993-37.3.i","DOIUrl":"https://doi.org/10.2308/0888-7993-37.3.i","url":null,"abstract":"","PeriodicalId":51419,"journal":{"name":"Accounting Horizons","volume":"5 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-08-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135619607","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-08-23DOI: 10.2308/horizons-2022-018
Elizabeth N. Cowle, Ryan P. Decker, Stephen P. Rowe
SYNOPSIS Regulators have long expressed concerns about auditor changes and the detrimental impact of opinion shopping on the audit market. Whereas prior studies have examined how single-instance auditor switching impacts audit outcomes, we examine whether frequent auditor switching impacts audit outcomes. We find that more frequent auditor switching is associated with lower audit quality, but that this effect is mitigated in the presence of higher internal and external monitoring. We also find that frequently switching companies have lower audit quality than companies that switch auditors, but do not frequently switch auditors. Taken together, our evidence indicates that a subset of companies participates in frequent auditor switching and that such behavior is detrimental to the audit market. Our findings can inform regulators and practitioners about some of the ramifications of frequent auditor switching and help inform auditor switching regulations and client acceptance procedures.
{"title":"Retain or Rotate: The Association between Frequent Auditor Switching and Audit Quality","authors":"Elizabeth N. Cowle, Ryan P. Decker, Stephen P. Rowe","doi":"10.2308/horizons-2022-018","DOIUrl":"https://doi.org/10.2308/horizons-2022-018","url":null,"abstract":"SYNOPSIS Regulators have long expressed concerns about auditor changes and the detrimental impact of opinion shopping on the audit market. Whereas prior studies have examined how single-instance auditor switching impacts audit outcomes, we examine whether frequent auditor switching impacts audit outcomes. We find that more frequent auditor switching is associated with lower audit quality, but that this effect is mitigated in the presence of higher internal and external monitoring. We also find that frequently switching companies have lower audit quality than companies that switch auditors, but do not frequently switch auditors. Taken together, our evidence indicates that a subset of companies participates in frequent auditor switching and that such behavior is detrimental to the audit market. Our findings can inform regulators and practitioners about some of the ramifications of frequent auditor switching and help inform auditor switching regulations and client acceptance procedures.","PeriodicalId":51419,"journal":{"name":"Accounting Horizons","volume":"96 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-08-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135520705","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-08-21DOI: 10.2308/horizons-2022-005
M. Geiger, A. Gold, P. Wallage
Auditing researchers rarely engage practicing auditors regarding the phenomena examined, or conclusions reached, in academic research. In an attempt to bridge this gap, we report on the outcomes, insights, and observations from focused interactions with Dutch audit practitioners regarding their perspectives on recent research regarding auditor going concern opinion (GCO) decisions. We provided practitioners with a summary of some of the most salient recent GCO research findings and the goals of our subsequent discussions were to (1) obtain practitioners’ responses to the research findings, and (2) identify relevant issues for future study from the perspective of practitioners. Accordingly, we report on our discussions with practitioners and provide a summary of practitioner-informed GCO-related future research topics. In this first of a two-part sequence, we provide background information relating to our practitioner interactions, and summarize our discussions pertaining to GCO outcomes and GCO consequences, as well as future research. JEL Classifications: M42.
{"title":"Practitioner Perspectives on Going Concern Opinion Research and Suggestions for Further Study: Part 1—Outcomes and Consequences","authors":"M. Geiger, A. Gold, P. Wallage","doi":"10.2308/horizons-2022-005","DOIUrl":"https://doi.org/10.2308/horizons-2022-005","url":null,"abstract":"\u0000 Auditing researchers rarely engage practicing auditors regarding the phenomena examined, or conclusions reached, in academic research. In an attempt to bridge this gap, we report on the outcomes, insights, and observations from focused interactions with Dutch audit practitioners regarding their perspectives on recent research regarding auditor going concern opinion (GCO) decisions. We provided practitioners with a summary of some of the most salient recent GCO research findings and the goals of our subsequent discussions were to (1) obtain practitioners’ responses to the research findings, and (2) identify relevant issues for future study from the perspective of practitioners. Accordingly, we report on our discussions with practitioners and provide a summary of practitioner-informed GCO-related future research topics. In this first of a two-part sequence, we provide background information relating to our practitioner interactions, and summarize our discussions pertaining to GCO outcomes and GCO consequences, as well as future research.\u0000 JEL Classifications: M42.","PeriodicalId":51419,"journal":{"name":"Accounting Horizons","volume":" ","pages":""},"PeriodicalIF":2.5,"publicationDate":"2023-08-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45217027","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-08-18DOI: 10.2308/horizons-2022-110
Lauren M. Cunningham, Linda A. Myers, Justin C. Short
Demand for chief financial officer (CFO) service on corporate boards has grown substantially in recent years, leading to questions about how outside board appointments affect a CFO’s ability to fulfill their home firm responsibilities. In this paper, we focus on the CFO’s core responsibility of overseeing home firm financial reporting quality, and we explore the types of situations where outside board service may lead to either learning opportunities or pressure to shirk on home firm duties. Our results should interest investors, auditors, and board members considering the implications of CFO outside board service because, although we observe no negative impacts on home firm financial reporting quality arising from outside board service, we find only limited situations where significant benefits accrue. Data Availability: All data are publicly available from sources cited in text. JEL Classifications: G34; M40; M41.
{"title":"Do CFO Outside Directorships Benefit or Harm Home Firm Financial Reporting Quality?","authors":"Lauren M. Cunningham, Linda A. Myers, Justin C. Short","doi":"10.2308/horizons-2022-110","DOIUrl":"https://doi.org/10.2308/horizons-2022-110","url":null,"abstract":"\u0000 Demand for chief financial officer (CFO) service on corporate boards has grown substantially in recent years, leading to questions about how outside board appointments affect a CFO’s ability to fulfill their home firm responsibilities. In this paper, we focus on the CFO’s core responsibility of overseeing home firm financial reporting quality, and we explore the types of situations where outside board service may lead to either learning opportunities or pressure to shirk on home firm duties. Our results should interest investors, auditors, and board members considering the implications of CFO outside board service because, although we observe no negative impacts on home firm financial reporting quality arising from outside board service, we find only limited situations where significant benefits accrue.\u0000 Data Availability: All data are publicly available from sources cited in text.\u0000 JEL Classifications: G34; M40; M41.","PeriodicalId":51419,"journal":{"name":"Accounting Horizons","volume":" ","pages":""},"PeriodicalIF":2.5,"publicationDate":"2023-08-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47377336","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-08-18DOI: 10.2308/horizons-2020-158
Jagadison K. Aier, Keith L. Jones, Qiyang Lian, Joseph H. Schroeder
We examine the cost and consequences of switching auditors. Specifically, we consider several client costs (audit fees, going-concern opinions, and internal control opinions) in the last year of an audit engagement (“terminal year”). We find that outgoing auditors are more likely to charge higher audit fees, issue more going-concern opinions, and issue more adverse internal control opinions during the terminal years of their audits. These findings suggest that outgoing auditors gain greater bargaining power, are more likely to charge for additional hours of audit work, and are less likely to yield to client pressures. Overall, our results suggest that companies face real economic costs from the outgoing auditor in addition to the start-up costs of the incoming auditor. Data Availability: Data are publicly available from sources identified in the text. JEL Classifications: G31; G32; G33; M21.
{"title":"An Examination of the Terminal Year in an Auditor-Client Relationship","authors":"Jagadison K. Aier, Keith L. Jones, Qiyang Lian, Joseph H. Schroeder","doi":"10.2308/horizons-2020-158","DOIUrl":"https://doi.org/10.2308/horizons-2020-158","url":null,"abstract":"\u0000 We examine the cost and consequences of switching auditors. Specifically, we consider several client costs (audit fees, going-concern opinions, and internal control opinions) in the last year of an audit engagement (“terminal year”). We find that outgoing auditors are more likely to charge higher audit fees, issue more going-concern opinions, and issue more adverse internal control opinions during the terminal years of their audits. These findings suggest that outgoing auditors gain greater bargaining power, are more likely to charge for additional hours of audit work, and are less likely to yield to client pressures. Overall, our results suggest that companies face real economic costs from the outgoing auditor in addition to the start-up costs of the incoming auditor.\u0000 Data Availability: Data are publicly available from sources identified in the text.\u0000 JEL Classifications: G31; G32; G33; M21.","PeriodicalId":51419,"journal":{"name":"Accounting Horizons","volume":" ","pages":""},"PeriodicalIF":2.5,"publicationDate":"2023-08-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47451077","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"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：