We present the first large-sample empirical evidence on U.S. auditors' responses to changes in entity-level audit risk during 2006-2007, the period leading-up to the financial crisis of 2008-2009. Treating fiscal year 2005 engagements as a pre-crisis benchmark, we find that audit attention...

Several reforms of the Sarbanes Oxley Act were designed to strengthen the vigilance exercised by audit committee members in their oversight of independent financial-statement audits of U.S. public companies. After SOX, a shift occurred in the audit committee labor market such that more...

A restatement occurs when a previously issued financial statement contains a misstatement and this misstatement is detected and corrected. Higher audit quality lowers restatement probability by reducing misstatements, but it increases restatement probability by increasing the probability that...

Litigation poses a significant business risk for auditors. We argue that litigation events involving other auditors' deter audit firms from providing low quality audits. We find a significant subsequent decrease in the misstatement frequency of financial reports in within-industry audits...

We examine the reputational impact of an audit office issuing internal control material weaknesses (ICMW). While prior research has examined how clients that receive an ICMW respond, we focus on clients that receive clean internal control opinions. We predict and find that audit offices that...

Using a measure of office-level industry concentration/specialization (as opposed to a market-based measure), we identify situations in which auditor industry specialization could be detrimental for audit outcomes. In stable environments, industry specialist auditors should be able to apply...

Technology has made direct personal communication between companies and individual investors feasible. While advertisers and others have used personalization to make their messages more impactful, little is known about the potential impact of personalization on investor judgment. We study the...

We examine the role of interest rate sensitivity for bank acquisitions. We expect that the interest rate sensitivity of a bank impacts the likelihood that it is acquired as the fair value of fixed rate loans increases (decrease) when interest rates decrease (increase) while book values remain...