We analyze whether information asymmetry affects three major aspects of the audit process using an instrumental variables research design that exploits exogenous increases in information asymmetry stemming from brokerage house mergers and closures. Consistent with our predictions, we find that a...

We study how informed, strategic trading affects audit quality and investment efficiency. With the auditor's legal liability payment based on the decrease in the market price after an audit failure, informed trading provides a hedge to the auditor against legal liability risk. This weakens...

In response to Section 102(d) of the Sarbanes-Oxley Act, PCAOB Rule 2200 required annual reporting from all registered accounting firms via PCAOB Form 2. Filed for the first time during the second quarter of 2010, PCAOB Form 2 provides information about (1) each accounting firm's available human...

We investigate the strategic decision making of audit firms in a tendering process. In particular, we are interested in how audit firms behave to acquire audit clients and which audit quality is ensured. Our main findings are manifold. First, if two big audit firms are competing, we do not...

In this paper, we provide empirical evidence for the impact of disciplinary sanctions imposed on Spanish auditing firms and their engagement partners. The disciplinary sanctions resulted from external investigations, which revealed misapplications of auditing standards. In particular, we...

Although researches have extensively studied the relationship between audit quality and financial reporting, little has been said about the consequences to auditors of financial reporting failure in terms of impairment of the audit information role. Based in Taiwan’s unique setting, we...

Utilizing the Finnish setting, this paper examines the association between industry specialization of an individual audit partner and the quality of earnings reported for privately-held companies. Rules in Finland require that the name(s) of the audit engagement partner(s) appear in audit...

Audit quality is a much studied issue. Recently, various auditing researchers have looked at the idea that audit quality may be systematically related to the auditor being male or female. Although this seams a genuine research question, the approach adopted by these researchers (incorporating...

The purpose of this paper is to examine the value relevance of the perceived audit quality in terms of who audits, as well as the audit outcomes in terms of the auditor's opinion and accruals quality, in the pricing of debt capital for privately-held firms by examining a large sample of...

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...