The purpose of this study is to examine how external auditors react to clients' earnings management through classification shifting. It draws on the argument that auditors perceive earnings management as a reflection of managers' opportunism and potential litigation risk. Using audit fees, audit...

Purpose: This paper investigates the relation between the riskiness of a firm's investmentpolicies and the firm's appointment of an external auditor.Design/Methodology/Approach: Using a sample of U.S. publicly listed companies from 2004-2014, we hypothesize that firms with riskier investment...

This study examines how auditors react to clients’ engagement in classification shifting which refers to the intentional misallocation of line items within the income statement. We find that classification shifting is positively associated with audit fees, audit report lags, the issuance of a...

Purpose - This study examines the influence of the readability of annual reports on firms' ability to obtain trade credit from suppliers. Particularly, we conjecture that annual report readability helps firms obtain more trade credit from suppliers.Design/methodology/approach - We use the...