This study investigates the relationship between strong firm environmental performance and board characteristics that capture boards’ monitoring resource provision abilities during an era when natural environment related strategic opportunities have increased in importance. The authors relate proxy for to represent role (i.e., independence, CEO-chair duality, concentration of directors appointed after CEO, director shareholding) size, on multiple boards, CEOs other firms board, lawyers...

Using proprietary data that rate corporate social responsibility (CSR) disclosures of firms in 21 countries, this study examines how the strength nation-level institutions affects extent CSR disclosures. We then examine valuation implications and consider relation between firm value varies across countries. In contrast to prior studies, we separate into an expected unexpected portion where is a proxy for incremental information contained observe positive disclosure measured by Tobin's Q....

Numerous capital market studies have investigated the stock market's reaction to firms switching and from brand name auditors (Big 8/6/5/4 auditors). However, audit firm is only one possible indication of quality an auditor. This study contributes existing literature on auditor switching, by examining how reacts switches or that are considered be industry specialists. Consistent with our hypotheses, we find between Big 4 experience significant positive abnormal returns when successor...

ABSTRACT: This study examines the association between internal control deficiencies (ICDs) reported under Section 404 of Sarbanes-Oxley Act (SOX, U.S. House Representatives 2002) and presence former audit partners on committee who are affiliated (AFAPs) unaffiliated (UFAPs) with firm's external auditor. We find a negative AFAPs UFAPs ICDs. also results that suggest NYSE NASDAQ three-year “cooling-off” rule applying to may be unwarranted deserves further empirical regulatory attention....

SYNOPSIS: Because authoritative statements on corporate governance (e.g., the Sarbanes-Oxley Act of 2002) are silent about how frequently audit committees should meet, have considerable discretion in scheduling meetings. Although prior research shows frequency committee meetings is an important indicator effectiveness committee, we know very little underlying determinants meeting frequency. In this study, examine a voluntary system, New Zealand. We find that multiple directorships,...

SUMMARY We expand upon the traditional market share-based measure of industry specialization by auditors to address following question: Are specialist who obtain their share auditing varying proportions clients in an similar terms product (audit) quality and price (audit fees)? Our analyses suggest that audit is characterized a type segmentation which some specialists pursue differentiation strategies, focusing more extensively on acquisition requisite expertise, while others cost...

Following the enactment of Sarbanes Oxley Act 2002, US stock exchanges strongly advocate presence financial experts on audit committees. However, ideal definition expertise proves to be a controversial issue culminating with adopting wide scoped expertise. Using this definition, prior studies have not provided consistent evidence positively influencing committee effectiveness. We investigate association between three types (accounting, finance and supervisory expertise) accruals quality....

Purpose Prior studies examining the relation between shareholdings by institutional investors and firm value have produced mixed results. These assumed that a linear exists corporate shareholdings. The purpose of this study is to further investigate nature relationship partitioning into institutions appointed representative board directors firms in which they block investment with similar holding but without on directors. Design/methodology/approach based sample 123 available financial...

Prior literature suggests a positive relationship between financial reporting quality and the presence of accounting experts on audit committees. This study investigates association accruals characteristics mix non-accounting (finance supervisory) expertise Using post-SOX data, our results indicate committee who are independent, hold fewer multiple directorships, have lower tenure in their firms. Furthermore, suggest that most effect is achieved when combined with finance Supervisory...

ABSTRACT: To address potential threats to auditor independence, the Sarbanes-Oxley Act of 2002 (SOX) requires audit committee pre-approve nonaudit services (NAS) procured from auditor. However, presence a former firm partner (FAP) affiliated with current on could undermine committee's due diligence over NAS pre-approval process. alleviate such concerns, Securities and Exchange Commission approved three-year “cooling-off” period for appointing alumni as independent directors. Our analyses...

ABSTRACT We examine whether and how firms structure their merger acquisition deals to avoid antitrust scrutiny. There are approximately 40% more mergers acquisitions (M&As) than expected just below deal value thresholds that trigger review. These “stealth acquisitions” tend involve financial governance contract terms afford greater scope for negotiating assigning lower values. also show the equity values, gross margins, product prices of acquiring competitors increase following such...

ABSTRACT: This study examines how options trading affects the rate of return expected by investors, i.e., implied cost equity capital. Our cross-sectional analysis suggests that firms with listed have lower capital than without options, while results from our temporal difference-in-differences suggest experience a significant decrease in their relative to matched sample following an listing. Moreover, we find within higher volume are associated These findings, which robust wide range...

ABSTRACT In this study, we predict and provide evidence that distressed firms rely more heavily on major customers for sales have a comparatively higher incidence of receiving going‐concern opinions (GCOs). Moreover, find the effect increased reliance is driven by are distressed. We also theorize variations in key characteristics relationship between firm its largest customer incrementally linked to GCOs, present consistent with this. Specifically, greater relatively smaller than their...

ABSTRACT This study examines associations between auditor provided tax compliance and planning services avoidance risk. Collectively, our results suggest that companies paying their auditors for advice are more effective planners (in terms of higher lower risk) than firms do not engage work. Our pronounced clients with expertise longer tenure, as well operational complexity. We also find hold only when work, which is consistent seeking to minimize reputation threats. study's unique...

ABSTRACT This study examines whether the audit quality of Big 4 firms is affected by an office's proximity to more target universities for appointing staff auditors. We identify these using a recruitment map firm and unique office-level hiring data hand-collected from LinkedIn. Our findings suggest that offices closer their key feeder schools with accredited business are associated higher quality, as observed lower likelihood financial accounting misstatements. results robust across...

SUMMARY Although the Sarbanes-Oxley Act of 2002 (SOX) banned most nonaudit services (NAS), it did not restrict auditors from providing tax NAS to their audit clients. In post-SOX period, regulators and investors are highly concerned about increase in consequently calling for restrictions. The profession contends that beneficial opposes limitations. We contribute this ongoing debate fill a void literature by examining investors' perception auditor-provided NAS, as reflected implied cost...

ABSTRACT: Using a sample of 99 New Zealand stock-exchange-listed firms we employ agency framework and strategy typology to examine whether introduction unionization legislation affects value prospector more negatively than defender firms. The results from this examination indicate that characterized by higher Growth-Diversity Innovation-Risk (prospector firms) experience greater loss in value. We attribute the costs associated with strategies adopted hold after controlling for variables such...

Prior literature finds evidence that clients of industry specialists have a lower level discretionary accruals compared with nonspecialists. This finding suggests constrain the use accruals. In addition to opportunistic reasons, however, managers also can make earnings more informative. We examine market pricing specialist and nonspecialist auditors. If but allow informative accruals, we expect stronger relation between returns for specialists. two different analyses based on Subramanyam...

SUMMARY We employ a novel framework to evaluate the audit quality implications of cumulative industry expertise that partners acquire from auditing public clients across their careers. Leveraging historical data partner engagements with in China, we find development is explained by various experiences initial year handling clients, as well growth, homogeneity, and demand for specialized knowledge an industry. Our main results reveal positive significant association between different proxies...

SUMMARY This study uses a unique dataset that separates tax nonaudit services (NAS) into planning and compliance NAS to examine how audit quality is affected by these two types of NAS. Our main results, which account for decisions purchase disclose the breakdown NAS, show unaffected but positively associated with These findings suggest knowledge spillovers between documented in prior studies are attributable Additional tests reveal effect amplified auditor industry expertise. Also, presence...

ABSTRACT We examine the effect of pure (product differentiation or cost leadership) versus hybrid (a mix product and business strategies on equity capital. Our results suggest that firms with a pure, relative to hybrid, strategy have significantly lower equity, is equally driven by leadership strategies. also find following are associated systematic risk. Further, more pronounced in high-technology industries regions greater innovative findings robust an array robustness checks including...

Motivated by the continued allowance of tax non-audit services (NAS), recent studies (e.g., Cook and Omer 2012) document a positive effect NAS fees on avoidance. Based an extensive hand-collected sample firms voluntarily disclosing planning compliance components fees, we show that relationship between avoidance is driven fees. However, impact more pronounced if auditor provides in conjunction with services. Such findings are consistent knowledge spillover effects as auditor’s team most...