We examine the effects of enforcement inspection focus disclosure on financial reporting quality. We find that enforcement focus disclosure can either enhance or deteriorate the financial reporting quality. Further, we highlight conditions under which the disclosure of enforcement inspection...

Using a game-theoretical model, we examine reasons and driving forces for audit firm split-ups, like the case of EY. In addition, we also analyze the potential consequences of audit firm split-ups on both the audit market and the audit quality. We find that the split-up decision is mainly driven...

We examine whether higher book-tax conformity and its effects on firms’ investment and tax reporting decisions decrease misleading tax reporting and increase tax revenue. In contrast to previous studies, we incorporate an investment decision into a strategic tax-compliance model. In the model,...