We examine whether additional education requirements to enter the accounting profession lead to higher costs to clients. Using the 150-hour education requirement in the U.S. and the audit services market during the period 2000-2004 as the setting for our study, we find that corporations...

Focusing on the merger of Price Waterhouse and Coopers & Lybrand in 1998, we document increased audit quality (measured by earnings quality of the clients) for the merged firm and other big-X auditors 1 during the post-merger period because: 1) controlling for economic conditions, clients of...

Using a sample of U.S. firms spanning 2001-2008, we examine whether female directors or nonexecutive female directors or female audit committee members affect auditor choice and audit effort measured by audit fees. After correcting for selectivity bias and controlling for other known board, firm...

We use data from China to examine whether regulations that limit management influence over auditors improve audit quality. China's State-owned Assets Supervision and Administration Commission of the State Council (SASAC) issued two rules in 2004 aimed at improving audit quality for state-owned...

This study investigates the influence of management over auditor selection decisions during a period in which audit committees have “direct responsibility” for auditor selection. We find that contrary to the intent of SOX, management continues to have significant influence over auditor...

Using a large sample of audit client firms, this paper investigates whether and how the geographic proximity between auditor and client affects audit quality proxied by accrual-based earnings quality. We define an auditor as a local auditor if the auditor's practicing office is located in the...

We examine the association between country-level government quality and firms' choice of external auditors. Using a cross-sectional sample of 142,193 firm-year observations from 46 countries over 1998-2007, we show that the government quality of a country has a significant positive effect on the...

Prior research has shown that auditors who learn superiors' views before making their own judgment are influenced by them (e.g., Peecher 1996; Tan et al. 1997; Cohen and Trompeter 1998; Brown et al. 1999; Wilks 2002). We use the theory of motivated reasoning (Kunda 1990, 1999) to examine the malleability of...

In the past six years, the average number of industries (2-digit SIC) serviced by audit offices in the United States has grown by 20% and the number of industries where the office has specialization has fallen by 40% (Data Source: Audit Analytics). This suggests a trend away from specialization...

This study investigates the association of audit fee pressure with an inverse measure of audit quality, misstatements in audited data, during the recent recession. Fee pressure in a year is measured as the difference between benchmark “normal” audit fees and actual audit fees. We find fee...