The proposals to limit auditor liability, principally aimed at protecting the Big-4 from the risk of a catastrophic exposure to damages, are grounded on the assumption that auditors are generally over-deterred. The 2008 EC Commission Recommendation on auditor liability relies heavily on this...

This paper discusses the ability of models on cheap talk, and of audit and liability regulations, to provide analytically-based assessment of credibility of management forecast disclosure in market and regulated settings. While credibility is linked to restrictive conditions in pure market...

This paper performs a forensic analysis of Cisco’s transfer pricing cost sharing arrangement based on forensic economic analysis of public information, including Cisco’s SEC and foreign country regulatory filings, published materials containing insider accounts of Cisco’s operations,...

This study provides novel evidence on the magnitude of switching costs in auditing. We use a discrete choice approach to infer switching costs from clients' auditor choices. The demand estimation reveals that switching costs matter and that they differ by the direction with switching from...

According to the tournament theory, different hierarchies are paid different salaries. The salary gap between different hierarchies can motivate employees. The empirical data are from the 2005-2009 Survey Report of Audit Firms in Taiwan and published by the Financial Supervisory Commission...

We examine the effects of making multiple contemporaneous risk assessments on auditor sensitivity to the strategic and non-strategic risk related to managers' financial reporting decisions. We address our research question using a 2x2 between-subjects experiment conducted under the tenets of...

Many existing earnings management studies establish earnings management detection criteria by examining the statements of every organization under review for a significant period of time. While being suitable for the academia, this approach cannot be adopted by the practitioners, who do not have...

This article investigates the development of accountability and fiduciary loyalty as an institutional response to information asymmetries in agency relations, especially in firm-like settings. Lord Eldon articulated the crucial role of information asymmetries in opportunistic behaviour in early...

We examine whether Deloitte's spatial location in local audit markets affected the firm's adverse fall-out - in terms of decreased ability to retain new clients and maintain audit fees - from the 2007 PCAOB censure. We motivate our inquiry by the notion that auditor-client alignment and...

We investigated the relationship of self-regulation and the audit quality. We conduct our experiment in the context of auditing in a public goods game. First, players decide whether to join a self-regulatory organization, and second, whether to punish non-contributors. Finally, players assess...