This study investigates the relation between founding family ownership and earnings quality using data from Standard & Poor's 500 companies. Existing literature has documented that financial reporting is of higher when firms have stronger corporate governance mechanisms there greater demand for reporting. I provide two competing theories effect on supply quality: entrenchment alignment effect. The empirical results show that, average, associated with quality. In particular, find consistent...

ABSTRACT Our paper examines whether audit quality is higher for industry specialists at the national and city‐office levels using framework developed in Ferguson et al. [2003] Francis [2005] . We find that auditors who are both city‐specific have clients with lowest abnormal accruals, suggesting joint highest quality. In addition, we some evidence accruals of firms audited by city‐industry alone (without also being specific specialists) lower than those nonindustry specialists. Using...

The pricing of Big 5 industry leadership in the U.S. audit market is investigated using fee disclosures for 2000–2001 fiscal years and joint nationalcity framework Ferguson et al. (2003). There a significant premium 19 percent on those engagements where auditors are both nationally top-ranked auditor city-level leader city client headquartered, indicating that national city-specific jointly affect reputation pricing. However, there never any tests leaders alone without also being leaders, by...

We provide evidence on the preliminary effects of mandatory adoption International Financial Reporting Standards ( IFRS ) accounting quality for a relatively broad set firms from 20 countries that adopted in 2005 relative to benchmark group did not adopt matched strength legal enforcement, industry, size, book‐to‐market, and performance. Relative these firms, we find exhibit significant increases income smoothing aggressive reporting accruals, decrease timeliness loss recognition; however do...

ABSTRACT This study investigates whether the tax-specific industry expertise of external audit firm influences its clients' level tax avoidance. Our results suggest that clients purchasing services from their engage in greater avoidance when is a expert. Because potentially activities via provision consulting and financial statement audit, we also examine overall (i.e., combined expertise) associated with We find firm's generally avoidance, which suggests experts are able to combine develop...

ABSTRACT: This study investigates whether the agency conflicts inherent in a dual class ownership structure are associated with level of firms' tax avoidance. Dual presents unique problem because insiders control majority votes firm despite having claims to minority firm's cash flows. We examine avoidance for sample firms and find that extent declines as difference between voting rights flow increases. also compare propensity matched single engage less wedge insiders' These findings...

SUMMARY: We examine the relationship between auditor competition and likelihood of financial restatements that occur as a result failures in application generally accepted accounting principles (GAAP). Policy makers audit market participants have expressed concern current level is low, resulting negative impact on quality. However, we find are more likely to metropolitan statistical areas (MSAs) higher competition. The association statistically economically significant. Our finding positive...

ABSTRACT This study examines the extent to which audit clients successfully engage in internal control opinion shopping activities and whether market competition appears facilitate those activities. Regulators have long been concerned about impact of both on quality. We adopt framework developed Lennox (2000) construct a proxy measure tendency that Our empirical results suggest are successful for clean opinions. In addition, we find evidence occurs primarily competitive markets. Finally, our...

We provide evidence on the preliminary effects of mandatory adoption International Financial Reporting Standards (IFRS) accounting quality for a relatively broad set firms from 20 countries that adopted IFRS in 2005 relative to benchmark group did not adopt matched strength legal enforcement, industry, size, book-to-market, and performance. Relative these firms, we find exhibit significant increases income smoothing aggressive reporting accruals, decrease timeliness loss recognition; however...

ABSTRACT Brand name audit firms are global networks of local firms. These claim to enforce consistent methodologies across their member firms, which, if true, should systematically affect client financial reporting. We find that clients from different countries have more (less) comparable accruals when they audited by the same network (different networks). Furthermore, inferences similar we examine accrual comparability around firm switches induced failure Andersen, which serves as a shock...

This study investigates the impact of U.S. Securities and Exchange Commission's (SEC) mandated public disclosure audit fees on subsequent period pricing. Our theoretical model predicts that initial will lead to greater precision reduced dispersion (less variance) in fees. Using new fee disclosures first two years (2000 2001), we find significantly smaller variances as predicted for 2001 relative 2000. In addition, document those clients were “overcharged” (“undercharged”) 2000 have lower...

The association of a country's investor protection regime with the quality reported earnings is examined for large sample firms from 42 countries. Three attributes are evaluated: magnitude abnormal accruals, likelihood reporting losses, and conservatism (timely loss recognition). We find that increases Big 4 auditors when gives stronger to investors; specifically, accruals smaller, there greater greater. In contrast, non-Big largely unaffected by different regimes. study adds growing body...

SYNOPSIS We investigate the impact of Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 5 (AS5) on audit fees and quality. AS5 supersedes 2 (AS2), became effective for audits accelerated filers fiscal years ending or after November 15, 2007. Using a large sample subject to AS5, we find evidence that decrease upon adoption AS5. More importantly, even though reduces our test sample, no in In summary, document improves efficiency internal control audits. JEL Classifications: M41.

Abstract Recent studies indicate dividends are associated with higher‐quality earnings. Our study extends the literature by examining whether dividends' information is auditors' assessment of their clients' earnings quality. results show that auditors charge lower fees to dividend‐paying clients than nondividend‐paying and average fee discount ranges from 6.0 10.6 percent. More importantly, we find have an interactive effect respect persistence manipulation: negative association between...

This study investigates whether the agency conflicts inherent in a dual class ownership structure are associated with level of firms' tax avoidance. Dual presents unique problem because insiders' voting rights (i.e., ability to control firm) exceed their cash flow claim on payouts firm). Thus, insiders majority votes firm despite having claims minority firm's flows. We examine levels non-conforming and conforming avoidance for sample firms. Among firms, we find that extent is declining as...

SUMMARY Increased audit regulation, coupled with reports of frequent mergers among smaller firms, creates a dynamic environment in which to assess changes the U.S. market. We examine quality consequences firm between small firms that public clients, topic about little is known. Using sample each involved single merger during 2004–2016, we find consistent evidence post-merger decreases when PCAOB-identified deficiencies and fees are used as proxies for quality. In addition, weak lower...