We examine whether auditors respond to cybersecurity risks by investing more heavily in cybersecurity human capital. Additionally, we explore auditors’ role in helping their non-breached clients in raising cybersecurity awareness and investing in cybersecurity personnel. We find that audit...

We analyze whether information asymmetry affects three major aspects of the audit process using an instrumental variables research design that exploits exogenous increases in information asymmetry stemming from brokerage house mergers and closures. Consistent with our predictions, we find that a...

We examine the role that individual auditors' social capital plays in their audit quality, client acquisition activities, and career advancement. Our analysis focuses on social capital stemming from educational ties, as measured by the size of an auditor's university alumni network among those...

We examine the role that an audit firm’s national office plays in shaping its practice offices’ economic outcomes. Given that national offices provide superior support, monitoring, and advising to physically closer offices, we expect an increase in proximity to improve practice offices’...

We find that mutual funds whose managers are socially connected with firm auditors hold more shares of these firms and generate superior portfolio returns. Cross-sectional results reveal that the relation between social connections and mutual fund stockholdings is more pronounced: when the...

We analyze a unique auditor independence threat stemming from audit partners’ incentives to secure new revenue streams using the context of audit clients belonging to business groups. Since a partner who issues a modified audit opinion (MAO) to a group-affiliated client risks losing not only...

We examine the impact of social ties between mutual fund managers and auditors of public firms on mutual fund stockholdings. We find that mutual funds whose managers are socially connected with firm auditors hold more shares of these firms. In cross-sectional results consistent with...

We examine the impact of clients' tax enforcement on financial statement auditors. In a regression discontinuity design, we exploit the firm-registration-date-based application of a new rule that assigns firms to two different tax enforcement regimes. Our analysis implies that auditors exert...

This study shows that auditors are more likely to charge higher audit fees, issue false-positive going concern opinions (i.e., Type I error), and resign from high asset redeployability (AR) firms. In supplemental tests, we use path analysis to show that the significant associations between AR...

The ownership structures of Western European firms engender agency conflicts between: (i) owners and managers (type I); and (ii) minority and controlling shareholders (type II). Prior research stresses that credible financial reporting ameliorates agency problems by identifying any diversion of...