This paper analyzes audit firm supervision since the Public Company Accounting Oversight Board (PCAOB) began conducting inspections. First, we find that audit clients do not perceive that the PCAOB's inspection reports are valuable for signaling audit quality. Second, we document that the...

This study examines the market valuation of accounting earnings during the period before it is publicly revealed that the earnings are fraudulent. Using both cross-sectional and time-series valuation models, we first find that the market accords less weight to earnings when the accounting...

We investigate the relation between perceived competition and voluntary disclosure in the absence of capital market incentives by examining private UK companies, which have the option to withhold sales and costs of sales information from their publicly-filed accounts. We survey managers about...

Empirical results presented in this paper indicate that large auditors are more accurate than small auditors. DeAngelo (1981) has argued that large auditors have more incentive to maintain a reputation for accurate auditing because an audit failure may lead to a loss of rents due to auditor...

We test the effect of audit effort on earnings management using a unique database of hours worked by auditors on 9,738 audits in Greece between 1994 and 2002. When audit hours are lower, (1) abnormal accruals are more often positive than negative, (2) positive abnormal accruals are larger, and...

This study investigates whether an auditor's experience of litigation in the recent past affects subsequent financial reporting quality. At the audit firm level, we find accounting misstatements occur significantly less (more) often after audit firms are sued (not sued). At the audit office...