An important aim of the Sarbanes-Oxley Act (SOX) was to reduce cost of capital by enhancing auditor independence. However, prior literature has argued that SOX has been ineffective in meeting this objective. We contribute to this debate by first providing evidence suggesting that auditor...

This study examines the factors that lead to issuing negative opinions on semiannual reports while issuing positive opinions in annual reports from the perspective of auditor-client relationships in listed companies in Taiwan. The empirical results show that the importance of the client is...

In the past six years, the average number of industries (2-digit SIC) serviced by audit offices in the United States has grown by 20% and the number of industries where the office has specialization has fallen by 40% (Data Source: Audit Analytics). This suggests a trend away from specialization...

We argue that audit quality has direct and indirect effects on the cost of equity capital. Direct effects are consistent with auditor reputation effects reflecting insurance and/or assurance roles. However, if audit quality is at least in part a reflection of expected assurance levels, then we...

We reexamine the effect of financial restatements on the cost of equity vis-a-vis litigation risk. Specifically, we study the effect of litigation on post-restatement financing costs and whether market anticipates litigation before restatement announcement as evident from its effect on financing...

The unprecedented migration of Andersen's clients that followed Andersen's indictment in March 2002 potentially placed a large burden on successor auditors' audit resources. We refer to this strain, measured at the local-office level, as auditor capacity stress. We examine the effect of auditor...

We investigate the association between audit partner industry specialization and future stock price crash risk. Although research on audit partners has been growing, we are not aware of any prior studies that investigate partner-level specialization and crash risk. Using a large sample of...

We investigate the effects of engagement auditor industry specialization on stock price crash risk. Although research on audit partners has been growing, we are not aware of any prior studies that investigate partner-level specialization and crash risk. Using a large sample of Chinese stocks...

Breaking from a long stretch of using largely standard language in unqualified audit opinions, the Public Company Accounting Oversight Board (PCAOB) expanded audit reports to disclose Critical Audit Matters (CAMs) and the audit procedures used to address them. The first wave of CAM disclosures...

This paper examines the association between abnormally long audit report lag and future stock price crash. Audit report lag is defined as the period between a company's fiscal year end and the audit report date, and is informative about audit efficiency. Although a substantial body of literature...