Because internal control audits never existed before the passage of the Sarbanes-Oxley Act (SOX), and these audits became mandatory for all U.S. accelerated filer companies at the same time, it has been difficult to assess the extent of investor demand for these audits. To understand whether...

This study investigates the influence of management over auditor selection decisions during a period in which audit committees have “direct responsibility” for auditor selection. We find that contrary to the intent of SOX, management continues to have significant influence over auditor...

Theory suggests that information asymmetry between supplier and customer firms exacerbates the holdup problem. We investigate if an auditor common to the supplier and customer firm improves information flows leading to reduction in the holdup problem. Consistent with this notion, we find that...

In this study we predict and provide evidence that distressed firms that rely more heavily on major customers for sales have a comparatively higher incidence of receiving going concern opinions (GCOs). Moreover, we find that the effect of increased reliance on major customers is driven by firms...

Exploiting a legal regime change in China in 2005 that significantly increased auditors' legal liability, we reexamine why auditors are more likely to issue modified audit opinions (MAOs) to clients who receive negative press coverage before audit report dates. We find that the probability for...