This study investigates factors associated with restatement-related litigation against U.S. audit committee members. Using a sample of restatement-related litigation in the U.S. over the period 1999-2012, we find that the likelihood of audit committee litigation is higher in the post-SOX time...

This study examines local characteristics associated with non-Big 4 local market leadership and the impact of non-Big 4 local market leadership on competition. We identify non-Big 4 local market leaders by collecting accounting firm rankings from business publications for 46 of the largest...

In an effort to make audit reports more informative to investors, the U.K. recently passed a new audit reporting standard that requires auditors to disclose the risks of material misstatement (RMMs) that had the greatest effect on the financial statement audit. Using short-window market...

Prior research finds that companies committing fraud exhibit large inconsistencies between reported revenue growth and growth in revenue-related nonfinancial measures (e.g., number of stores, employees, patents). However, prior research also suggests that auditors, on average, are not adept at...

The remediation of Securities and Exchange Commission (SEC) comment letters can impose significant costs on companies. This study examines whether auditor involvement in the SEC comment letter process expedites comment letter resolution. Such a finding would indicate that auditors add value...

This study investigates whether audit litigants act as if they believe jurors will associate auditor-provided nonaudit services (NAS) with impaired auditor independence, and thus substandard auditor performance. Using GAAP-based financial statement restatements disclosed from 2001 – 2007 as an...

Although the Sarbanes-Oxley Act of 2002 imposes internal control disclosure and certification requirements on management, regulators are concerned that companies are not disclosing material internal control weaknesses on a timely basis. This study investigates whether litigation risk could act...

Using information accompanying the audit committee (AC) member voting recommendations of a proxy advisory service, we examine the circumstances that condition when and why ineffective AC members experience subsequent turnover from the board of directors. We broadly classify the sources of...

According to auditing standards, explanatory language added at the auditor's discretion to unqualified audit reports should not indicate increased financial misstatement risk. However, an auditor is unlikely to add language that would strain the auditor-client relationship absent concerns about...

Prior research confirms regulators’ concern that special purpose acquisition companies (SPACs) exhibit elevated financial reporting risk (Kim, Park, Peterson, and Wilson 2022). In this study, we explore the auditor’s role in either elevating or reducing SPAC financial reporting risks....