We exploit a regulatory change to examine whether bank regulator strictness is affected when regulators no longer rely on external assurance. In the absence of external assurance, we find that banks report higher nonaccrual loans, higher troubled debt restructurings, and both a timelier loan...

We examine how third party verification of internal controls over financial reporting (ICFR) affects bank supervision by exploiting a change in size thresholds for required FDICIA-related internal control audits. We document that affected banks have higher reported levels of non-performing loans...

This paper examines how the effect of the audit partner on accounting estimates varies across the tenure of a partner/client relationship. Using confidential data on audit partner identity in the banking industry, we find that banks systematically report higher loan loss reserves (LLRs) at the...