In this paper, we study spatial competition in the U.S. audit market while accounting for its two-tiered nature. We provide evidence on the differential impact that market share distances within and between the players in the large and small audit markets have on competition. We find that the...

This study examines the relevance of modified audit opinions (MAO) in private debt contracting. We use the auditor's explanatory language to partition MAOs into Inconsistency opinions, resulting from an accounting change or a restatement; and Inadequacy opinions, arising from a material...

A data processing procedure, DEA (Data Envelopment Analysis) is described as as an analytical tool in audit engagement. DEA receives data inputs from from financial statements of a plurality of clients, constructs efficiency frontiers and evaluates relative income efficiencies. DEA can be used...

We study clauses in private lending agreements requiring auditors to assure lenders of borrowers' compliance with financial covenants. Auditors are required under general purpose financial reporting to review covenant compliance. However, by informing lenders directly that they have no knowledge...

The minimization of cost is an important issue in the domain of continuous auditing (CA) research (Pathak, Chaouch amp; Sriram, 2005). This cited study of continuous audit of databases motivated us to work further and provide a general, complete and precise solution. In the present study, we...

The critical global role of audit firms, combined with the scarcity of qualified staff and downward pressure on fees, has increased the importance of understanding efficiency in this industry. This paper examines the technical and allocative inefficiencies of audit firm staffing using data from...

Risk premium is a category that is commonly used in various models assisting decision making process, such as widely described in literature Capital Asset Pricing Model. Furthermore, as scientists describe, the risk premium is a factor that has a significant meaning for the whole economy, since...

We examine a duopolistic setting in which firms pre-announce their future competitive decisions (e.g. prices, production quantities, capacity investments) before they actually undertake them. We show that firms overstate their future actions in their pre-announcements, and that their real action...

Two key assumptions underlying the regulation of U.S. financial reporting are the need to mandate the certification of financial statements, and to require that this certification be performed by independent auditors. Private incentives to demand (and supply) certification are thought to be...

This paper analyses the implications of mandatory attestation of tax returns. Attestations are provided by independent auditors competing on price. The paper identifies the conditions under which gatekeeping is socially desirable.In the most general set-up, in which the detection of erroneous...