As part of its charter, the Public Company Accounting Oversight Board (PCAOB) has the authority to inspect and review the workpapers of all accounting firms that provide auditing services to publicly-traded companies. The PCAOB summarizes their findings in publicly-available inspection reports...

We examine the association between Public Company Accounting Oversight Board (PCAOB) inspection reports and a firm's cost of equity capital, measured using seasoned equity offering (SEO) discounting. SEO discounting occurs when the offer price is lower than the prior day's market price of the...