Acquirers are motivated to overstate earnings prior to stock-financed acquisitions. We hypothesize that audits help to detect and correct such overstatements. We test this using a difference-in-differences design, which compares audit adjustments to earnings for stock-financed and cash-financed...

Audit firms face conflicting incentives. On one hand, they are motivated to provide high quality audits in order to protect their reputations and avoid regulatory sanctions but, on the other hand, they also need to please their clients in order to increase their revenues. We argue that these...

The last decade has witnessed a boom in archival studies examining auditing at the partner level. This research is timely because audit partners' names in the United States have been publicly disclosed starting in 2017. This paper reviews the existing archival literature on audit partners,...

Audit firms need to provide high quality audits but they also need to please their clients. We argue that these conflicting incentives become manifest when comparing the incentive effects of equity ownership on engagement quality (EQ) reviewers and audit engagement partners. We predict that EQ...

We examine how adjustments to earnings during year-end audits affect measures of earnings quality. There are four key findings. First, audit adjustments cause earnings to become smoother and more persistent. Second, the adjustments result in higher accrual quality. Third, audit adjustments have...