This paper uses firms' disclosures of internal control problems prior to audits mandated by Section 404 of the Sarbanes-Oxley Act (SOX) to investigate the economic factors that expose firms to internal control failure risks and managements' incentives to discover and report internal control...

We examine whether firms with managers that have prior internal audit experience are less likely to manage earnings. We find that firms with managers that have internal audit experience are associated with less overall earnings management, driven by lower real earnings management. Importantly,...

This study examines three research questions. First, did accrual reliability improve in the post-SOX period? Second, do companies receiving higher-quality audits report accruals that are more reliable? Third, did the degree of SOX-related improvement in accrual reliability vary across companies...

Are high audit fees a signal that the auditor exerted more effort or a signal that the auditor may be losing her independence? Prior literature offers conflicting evidence. In this paper, we re-examine the issue on a sample of clients who have both the incentive and the ability to use...

We provide evidence that distinguishes between competing production cost-based explanations of how to interpret unusually high (or low) audit fees and their expected relation with accounting quality. Abnormally high or low fees are typically proxied by the residuals obtained from fee models....

Prior studies document that firms having material weaknesses in internal control over financial reporting adjust more discretionary accruals in financial reporting process than other firms. This study examines the influence of industry-specialist audits on accrual management behavior of firms...

The existing literature on audit opinion shopping provides inconsistent evidence on whether such shopping has any association with abnormal audit fees. In this paper, we hypothesize that firms engage in audit opinion shopping and pay an abnormal audit fee only when their degree of accounting...

The U.S. Congress passage of the Sarbanes-Oxley Act of 2002 (SOX) was a direct response to the accounting scandals of the 1990s and an attempt to reform the financial/business reporting process. Due to corporate malfeasance in the United States since the mid 1990s, there has been a significant...

The purpose of this study is to examine whether mandated introduction of Public Company Accounting Oversight Board in United States of America improves the audit quality for listed companies. The empirical analysis includes the companies listed in NASDAQ stock exchange that constitutes 6,600...

The disclosure of non-GAAP (pro forma) earnings numbers by managers in the post-SOX era continues to attract attention from regulators, media, and researchers. However, there is limited empirical evidence on how auditors view clients that emphasize pro forma earnings over GAAP earnings. We study...