Although many have argued that independent audits implicitly provide clients with a form of insurance (the insurance hypothesis), there is limited empirical evidence to support the existence and magnitude of this function. In August of 2005, after months of intense negotiations and discussions,...

Using the SEC’s 2004 decision to begin publicly disclosing its comment letters, we study the consequences of increased regulatory transparency on the banking industry. Because the SEC only issues comment letters to public banks, we exploit a difference-in-differences design to examine the...