Audit firms face conflicting incentives. On one hand, they are motivated to provide high quality audits in order to protect their reputations and avoid regulatory sanctions but, on the other hand, they also need to please their clients in order to increase their revenues. We argue that these...

We construct a time-varying network of labor competitors for all U.S. public companies. We show the importance of this network for transmitting labor and industry shocks. There are three main findings. First, the overlap between firms' labor competitors and product market rivals is less than 20...

The last decade has witnessed a boom in archival studies examining auditing at the partner level. This research is timely because audit partners' names in the United States have been publicly disclosed starting in 2017. This paper reviews the existing archival literature on audit partners,...

Audit firms need to provide high quality audits but they also need to please their clients. We argue that these conflicting incentives become manifest when comparing the incentive effects of equity ownership on engagement quality (EQ) reviewers and audit engagement partners. We predict that EQ...

We examine how adjustments to earnings during year-end audits affect measures of earnings quality. There are four key findings. First, audit adjustments cause earnings to become smoother and more persistent. Second, the adjustments result in higher accrual quality. Third, audit adjustments have...

This paper examines the effect of shareholder governance on firms' cost of borrowing. Using voting results on shareholder-sponsored governance proposals, we find significant and negative reactions in the public debt and secondary loan markets to the passage of governance proposals. Banks also...

Listed companies commonly appoint their incumbent annual auditors to audit a target company during a merger and acquisition (M&A). However, some companies choose an alternative auditor to perform the M&A audit. To understand the consequences of this apparently unconventional auditor choice, we...

In recent years, the Chinese government and the public accounting profession have advocated the audit practitioners’ use of professional liability insurance (PLI). As a tool to divert audit firms’ business risk, PLI contracts could decrease auditors’ diligence in conducting audits, which...