This paper investigates the common, yet previously opaque, practice of using foreign audit firms (component auditors) to conduct portions of audit work for U.S. public companies. U.S. regulators have expressed concern for the transparency and quality of audits using component auditors. Employing...

The mandatory retirement age within U.S. audit firms ranges from 55 to 62, which has resulted in both controversy and legal scrutiny. The potential cost of requiring partners to retire at an age that is far younger than in other countries and related professions is the loss of their connections,...

This paper explores an increasingly prevalent element of board-level commitment to sustainability. We propose a theoretical framework under which the existence and associated actions of board-level sustainability committees are motivated by shared value creation, where the interests of a diverse...

We use new data to examine auditor response to negative media coverage of client environmental, social, and governance (ESG) practices. This coverage can be indicative of an increased risk of material misstatement, which is an important assessment in client retention and pricing decisions....

This paper investigates the common, yet previously opaque, practice of using foreign audit firms (component auditors) to conduct portions of audit work for U.S. public companies. U.S. regulators have expressed concern for the transparency and quality of audits using component auditors. Employing...

We fine-tune a large language model to classify accounting topics within financial disclosures. This allows for the efficient and accurate classification of accounting topics in large volumes of out-of-sample unlabeled text. Specifically, our model leverages innovations in supervised machine...

This study investigates the determinants, textual properties, and consequences of the newly disclosed U.S. critical audit matters (CAMs). We find that complexity, financial reporting issues, and the magnitude of accounts that require high degrees of judgment significantly determine the quantity...