In this paper, we examine audit quality for Big 4 and Second-tier auditors during 2003-06. We utilize the auditor's propensity to issue a going concern audit report for distressed clients as a measure of audit quality. In addition, since the purpose of an audit is to improve financial reporting...

We investigate whether reputation concerns provides sufficient incentive for Big Four auditors to provide higher quality audits in ASEAN (Association of South East Asian Nations) countries where litigation exposure is low or nonexistent. We proxy audit quality based on the quality of reported...

We examine the relation between nonaudit fees and SOX 404 opinions on the effectiveness of a client's internal control over financial reporting. We find a negative association between nonaudit fees and the auditor's propensity to issue an adverse SOX 404 opinion during 2004-2006 (when AS2 was...

In this paper, we examine timely loss reporting for U.S. firms with a dual-class share structure, i.e., firms characterized by a divergence (wedge) between insiders' voting rights and cash flow rights. In our primary analysis, we find compelling evidence that the wedge (quantified by excess...

We examine the consequences of misconduct in a Big 4 firm's nonaudit practice for its audit practice. Specifically, we examine whether KPMG's audit practice suffered a loss of audit fees and clients and/or a decline in factual audit quality following the 2005 deferred prosecution agreement (DPA)...

Both the GAO (2003, 2008) and the US Treasury (2008) have implied that the Big 4 dominated US audit market lacks competition. More recently, the PCAOB has expressed a somewhat different concern, i.e., that because audit committees may be primarily interested in negotiating a lower audit fee...

Prior research suggests an asymmetric relation between CEO cash compensation and firm performance as measured by market-adjusted stock returns. As discussed by Leone et al. (2006), the underlying rationale for this asymmetry is the difficulty in the ex post settling- up of cash compensation. We...

Although investor perceptions of audit quality play a critical role in maintaining systemic confidence in the integrity of financial accounting reports (Levitt 2000), prior research on the effects of auditor tenure from an investor perspective is relatively sparse. In this study, we investigate...

In this cross-border study, we document the usefulness of reported earnings as conditioned by varying levels of litigation risk. We focus on litigation risk, since Ball (2001) suggests that although litigation rights are seldom discussed in the context of international accounting, the threat of...

In recent years, both the SEC (2003) and the FASB (2004) have indicated a need for accounting standards where principles are balanced by implementation guidance (i.e., a framework for exercising professional judgment). In this study, we take advantage of a jurisdictional split during 1996-2001...