We investigate the strategic decision making of audit firms in a tendering process. In particular, we are interested in how audit firms behave to acquire audit clients and which audit quality is ensured. Our main findings are manifold. First, if two big audit firms are competing, we do not...

The majority of audit litigation research has focused on juror judgments. We examine how jurors' negligence judgments and attorneys' out-of-court settlements are differently impacted by two features of a materially misstated accounting estimate — the amount of estimate uncertainty and whether...

We examine whether tax audits become more efficient if tax auditors have access to audited financial statements and information about statutory audit adjustments. We extend the standard tax compliance game by a statutory auditor to analyze the strategic interactions among a firm issuing...

Regulators in the US ruled against introducing mandatory firm rotations in addition to the existing rule for periodic partner rotations. In contrast, European regulators ruled in favour of a dual mandatory rotation rule in which both audit firm and audit partner rotations are required. Employing...

Studies on demand side mechanisms related to experience goods argue that demand is driven by recommendation and reputation. In an auditing context, research showed that both of these mechanisms play an important role in determining partner selection, however, only when the mechanisms are...

We use a structural application of the discrete choice model to investigate how the introduction of a joint audit policy would affect audit market structure and consumer surplus. We perform this policy evaluation by identifying demand fundamentals in a joint audit regime and applying them to a...

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...

This study investigates the association between private company auditing and intertemporal income shifting. Using a large reduction in the Finnish corporate tax rate as a strong incentive for income shifting and financial statement data coupled with proprietary information from the tax...

This paper examines how accounting audits impact investment decisions in the presence of agency conflicts. Investors choose between a short-term risk-free asset and a long-term risky project. The manager in charge of the latter has incentives to inflate interim payoffs to be able to continue a...

We investigate the strategic decision making of audit firms in a tendering process. In particular, we are interested in how audit firms behave to acquire audit clients and which audit quality is ensured. Our main findings are manifold. First, if two big audit firms are competing, we do not...