ABSTRACT: This study examines the association between corporate governance and disclosures of material weaknesses (MW) in internal control over financial reporting. We this using MW reported under Sarbanes-Oxley Sections 302 404, deriving data on audit committee expertise from automated parsing member qualifications their biographies. find that a lower likelihood disclosing Section 404 is associated with relatively more members having accounting supervisory experience, as well board...

Purpose The paper aims to examine the relation between fees paid auditors and audit quality during period of 2000‐2003. Design/methodology/approach constructs a measure auditor profitability that is used as proxy for independence. methodology grounded in notion independence influenced by effort risk‐adjusted fees, rather than level received from clients. Since, risk are unobservable, uses proxies based on client size, complexity estimate abnormal fees. Abnormal derived using fee estimation...

This paper investigates factors associated with high‐quality Enterprise Risk Management ( ERM ) programs in financial services firms, and whether quality enhances performance signals credibility to the markets. , developed assistance of accounting profession, provides a framework plan integrate management all sources risk. Challenged by measurement difficulties common research on control systems, prior studies present mixed findings. Using ratings companies Standard & Poor's, we find...

ABSTRACT We propose a new measure of accounting reporting complexity (ARC) based on the count items (XBRL tags) disclosed in 10-K filings. The preparation and disclosure more is complicated because it requires greater knowledge authoritative standards. This aspect can increase likelihood mistakes, incorrect application GAAP, ultimately lead to less credible financial reports. Consistently, we find that ARC associated with misstatements material weakness disclosures, longer audit delay,...

ABSTRACT Using unique survey data from Great Place to Work® Institute, we investigate the association of intraorganizational trust (i.e., employees’ in management) with three aspects financial reporting: accruals quality, misstatements, and internal control quality. We find that is associated better accrual lower likelihood statement material weakness disclosures. However, these effects are not uniform across all companies. Consistent improving reporting quality through improved information...

ABSTRACT This study uses difference-in-differences (DiD) analyses to examine the consequences of adopting U.S. critical audit matter (CAM) disclosure requirement for preparers and users financial reports. The CAM is one largest expansions report since 1940s. We document significant changes statement footnotes referenced by CAMs, which suggests an indirect consequence where management in areas that are expected be scrutinized following auditor-provided disclosure. Results also suggest that,...

This paper extends prior research on audit risk adjustment by examining the association of pricing with problems in internal control over financial reporting, disclosed under Sections 404 and 302 Sarbanes-Oxley Act [SOX]. While studies auditors' responses to provide mixed evidence, it is important re-examine this issue using data specific client not available SOX. As a baseline, we first establish strong fees year implementation Section 404, consistent (e.g., Raghunandan Rama 2006). We then...

SUMMARY This paper investigates the overall impact of and information made available by recent audit partner disclosure requirement in U.S. After a contentious comment period, PCAOB released Rule 3211, which requires registered public accounting firms to disclose name for every report it issues. In first year adoption, we find significant increase quality fees decrease delay. We collect on gender, busyness, education, social connections explore whether these newly observable characteristics...

Considerable prior research investigates whether the extent of insider presence on corporate boards is detrimental. However, majority past treats all inside directors as a homogenous group. This study considers that issue in context chief financial officers (CFO) serving their own company's board. Our important because individuals different executive roles bring skills and knowledge to board interactions, highlighting potential for differential contributions. As does not specifically...

SYNOPSIS We use new data to examine auditor response negative media coverage of client environmental, social, and governance (ESG) practices. This can be indicative an increased risk material misstatement, which is important assessment in retention pricing decisions. Specifically, criticism threaten a client's financial condition, as well reveal management effectiveness integrity issues that are further compounded by attention related problems. therefore predict auditors will notice...

ABSTRACT PCAOB inspections repeatedly indicate deficiencies in audits of fair-value (FV) estimates, prompting regulators to improve the related auditing standards. We predict that auditor task-specific FV expertise, gained from work experience during audit measurements, can contribute higher quality. Utilizing FV-related restatements and comment letters, we find expertise Level 3 estimates at office level is associated with greater 2 or national not Following receipt a letter, further lower...

Purpose Recent US reforms aimed at strengthening audit committees and their structure grant independent the responsibility to appoint, dismiss, compensate auditors. The purpose of this paper is examine association between committee characteristics auditors' compensation dismissals following enactment Sarbanes Oxley Act (SOX). Design/methodology/approach A series linear logistic regression models were employed in a unique sample comprising 2,393 observations. Findings It was observed that...

ABSTRACT This paper investigates the common, yet previously opaque, practice of using foreign audit firms (component auditors) to conduct portions work for U.S. public companies. regulators have expressed concern transparency and quality audits component auditors. Employing data disclosed in newly mandated PCAOB Form AP, we find that auditor use is largely structural, determined by size complexity clients' multinational operations. We do not mere auditors detrimental outcomes, but rather...

SUMMARY This paper investigates remediation of Sarbanes-Oxley Section 404 material weaknesses (MWs). Prior research examines full all MWs or broad categories thereof. We build on these studies by investigating specific types MW, thus measuring progress in improving controls made companies that have not fully remediated problems. Specifically, we investigate whether MW differ likelihood and the association with earnings quality. Results show rates vary, is differentially associated...

We investigate the implications of shortage accounting graduates on audit firms' recruitment and outcomes. Using granular data from Revelio Labs, we identify graduates, their alma mater, firm offices that hire them. Surprisingly, recruiting by firms did not decline. Instead, decline in prompted to recruit more non-target universities reduce selectivity at traditional target universities. propose two office-level measures capture these shifts examine association with find greater are...

ABSTRACT We use large, detailed data on individual auditor employment to examine the antecedents of turnover decisions and subsequent career paths diverse individuals in public accounting—namely women racial/ethnic minority groups (Asian, Black, Hispanic). Despite investments diversity, equity, inclusion (DEI) recruiting by firms, we observe a higher likelihood among auditors. Consistent with principle homophily, find that same-group representation is crucial retaining These are less likely...

Download This Paper Open PDF in Browser Add to My Library Share: Permalink Using these links will ensure access this page indefinitely Copy URL DOI