Using Amiram, Bozanic, and Rouen's (2015) measures of the conformity of a firm's distribution of financial statement line items' leading digits to the Benford distribution, we examine whether different constructs of audit quality inputs are related to financial statement reliability. Overall, we...

This study investigates whether material noncompliance (MNC) with laws and regulations and internal control deficiencies (ICDs) in a nonprofit charitable organization (NPO) affect the likelihood that the NPO receives a going concern audit opinion (GCO) and the viability of the NPO. I find that...

This paper examines the impact of mandatory reporting and auditing of firms' financial statements on industry-wide resource allocation. Using threshold-induced variation in the share of mandated firms in a given industry, I document that reporting mandates facilitate ownership dispersion in...

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...

We examine the costs and benefits of proactive financial reporting enforcement by the UK Financial Reporting Review Panel. Enforcement scrutiny is selective and varies by sector and over time, yet can be anticipated by auditors and companies. We find evidence that increased enforcement intensity...

In this paper we investigate why auditors fail to report material weaknesses in internal controls (ICMWs) in advance of misstated audited financial statements. To address this question, we analyze Public Company Accounting Oversight Board (PCAOB) proprietary data on audit clients' internal...

This paper studies how legal liability due to negligence can weaken or strengthen an auditor's reputation concerns in the client market to provide high audit effort. A negligence liability rule relies on auditing standards to provide a threshold for the level of due care. When the negligence...

This paper studies the impact of public audit oversight on financial reporting credibility. We analyze changes in market responses to earnings news after public audit oversight is introduced, exploiting that the regime onset depends on fiscal year-ends, auditors, and the rollout of auditor...

Financial restatements are costly, but frequent, events and many firms restate several times. This paper asks why rational managers engage in misreporting, in spite of the costly consequences. We present a simple extension to the Fischer and Verrecchia (2000) model, which provides testable...