Statement on Auditing Standards No. 59 requires auditors to assess whether substantial doubt exists about a client's ability to remain a going concern. This study reports an experimental economic test of a game-theoretic model of that judgment. Competing behavioral predictions are based on loss...

This paper analyzes a game theoretic model in which a client can potentially avoid a going concern opinion and its self fulfilling prophecy by switching auditors. Incumbent auditors are less willing to express a going concern opinion the more credible the client's threat of dismissal and the...

This article identifies and discusses changes in the risks companies face in managing environmental issues. Specific attention is focused on the changes in direction at the Environmental Protection Agency, their current initiatives, and their expectations with regard to the new international...

This paper sets forth a conceptual model for web security within the context of the overall systems development effort, and within the context of traditional accounting internal control processes and structures. Such a model allows for the enterprise-wide control of security risks over a...

We examine the effect of lending banks' board representation (affiliated banker on board, or AFB) on conservative accounting. We argue that private information obtained through board representation enhances the monitoring and the influence of lenders and therefore reduces their demand for...

We find a model that uses both financial statement and market information is an unambiguously superior predictor of bankruptcy than the going concern (audit) opinion. However, the audit opinion has incremental predictive ability for bankruptcy beyond both financial statement and market-based...

We study the impact of derivatives on stock characteristics such as valuation, price efficiency, and liquidity. We resolve the endogeneity issue faced in the extant literature by using an order issued by the Indian market regulator that resulted in delisting of 51 stocks from the derivative...

We use computer-intensive techniques to study the informational properties of forward-looking disclosures in the MD&A sections of 10-K filings made with the SEC. We find that firms make more forward-looking MD&A disclosures when their stock prices have lower informational efficiency, i.e., when...

Section 404 of the Sarbanes-Oxley Act (SOX) requires every company to report on the effectiveness of internal controls over financial reporting. Section 404 has arguably been the most controversial provision of SOX, with many registrants complaining that the high cost of compliance outweighs its...

We examine whether firms that frequently issue quarterly earnings guidance behave myopically, where myopic behavior is defined as sacrificing long-term growth for the purpose of meeting short-term goals (Porter [1992]). We find that dedicated guiders invest significantly less in research and...