The paper develops a model of optimal auditing behavior when the economic environment adds a noise term to the firm's cash flows, which can be reduced by employing an external auditor. The paper connects the optimal auditing policy and (i) share prices of the firm and (ii) auditor's...

For a sample of 1,866 privatizations from 37 countries, we estimate the impact of disclosure standards and legal institutions that discipline auditors on the method chosen to divest state-owned enterprises. The agency conflict between minority and controlling shareholders can impede a government...

We investigate whether the financial riskiness of large US audit firm clienteles varied with the changing audit litigation liability environment during the period 1975-1999. Partitioning the period of study into four distinct periods [a benchmark period (1975-1984), a period of increasing...

Corporate Financial Risk Management (CFRM) concerns the management of financial price risks in corporate entities, namely interest rates, exchange rates and the prices of commodities. Since its first implementation in the 80s, CFRM has evolved in three main steps. In the first step, banks...

This text aims at highlighting a typology of small firms which, beyond those resting upon size or industry, allows to distinguish the firms according to their internal organization and the type of market on which they act. We will thus try to arrange the population of SMEs which is still often...

This paper provides evidence why Emerging Economies should not follow US and UK audit practices that have introduced untenable conflicts of interests and muddled corporate governance practices. The US 1933 law that required corporations to appoint an auditor was based on the prospectus...

Under Section 302 of the Sarbanes Oxley Act, officers must evaluate the effectiveness of internal controls quarterly. We examine the stock price reaction to management's disclosure of internal control weaknesses and to their characteristics, controlling for other material announcements are made...

In this paper, we examine a little known aspect of mutual fund accounting, whereby funds do not use contemporaneous fund holdings to calculate net asset values. This practice, sanctioned under SEC Rule 2a-4, uses stale portfolio holdings and gives rise to deviations between reported net asset...

Previous research in non-audit contexts suggests that managers design budgets based on prior performance relative to budget targets, and that this quot;ratchetingquot; response can be asymmetrical (i.e., greater increase in target following good performance than the decrease in target following...

A string of high profile corporate failures over the past years have led to strong regulatory responses for corporate governance, some of which are aimed at strengthening the audit function of the governance process. This paper introduces an analytical model investigating the desirability of...