This study examines investors' response to the disclosure of prior period, auditor-waived misstatements under Staff Accounting Bulletin No. 108, Considering the effects of prior year misstatements when quantifying misstatements in the current year. Auditors' misstatement correction decisions...

Initial public offering (IPO) companies are exempt from Section 404 of the Sarbanes-Oxley Act of 2002, leaving investors to assess the quality of an IPO company's internal controls, which affect the quality of management-provided financial information, without an opinion on internal controls...

The amount of estimation uncertainty contained in financial statement items may be obscured from investors, given that all estimates, regardless of their imprecision, are reported as precise figures on the face of the financial statements. Our study examines two disclosures expected to help...

Recent increases in the occurrence and magnitude of goodwill impairment charges highlight the increasing importance of the role of the auditor in goodwill accounting. This study examines the association between disclosures about the fair value measurement of goodwill and audit fees. We find that...

This study examines credit lending decision adjustments of executive board members of German banks following different levels of auditor materiality threshold disclosures. Based on an experimental research design, we find that if a materiality threshold, which is in line with current audit...

We examine the effect of Big 4 auditors on management's use of optimistic language in audited financial statement disclosures. While regulators and practitioners consider the audit of disclosures to be increasingly important, empirical evidence of an auditor's effect on management's qualitative...

We investigate whether and how a “critical audit matter” (CAM) disclosure affects managers' real operating decisions in two contexts (issuing a loan that decreases versus increases the average risk profile of loan portfolios, or choosing to hedge versus speculate on commodity risk). We...

Motivated by the ambiguity of auditor dismissals and dismissal disclosures, this study informs about an alternative signal – the timing of the dismissal – for inferring the causes and implications of dismissals. Dividing the reporting year into four periods when dismissals can occur, we find...

Auditor resignations are considered more negative signals than auditor dismissals, but firms' self-reported distinction between the two may not offer a complete or reliable representation of the nature of the auditor change. 8-K regulations require the disclosure of the adjournment of an audit...

The purpose of public company audits is to increase the integrity of firms' financial statements. However, research provides mixed evidence on whether better auditors mitigate misstatement risk embedded in the financial reporting process. A challenge in previous studies is the lack of a powerful...