Motivated by the ambiguity of auditor dismissals and dismissal disclosures, this study informs about an alternative signal – the timing of the dismissal – for inferring the causes and implications of dismissals. Dividing the reporting year into four periods when dismissals can occur, we find...

We examine whether internal auditing provides value to organizations by reducing risk. We compare the changes in risks between audited business units and matched non-audited units within the same company. This design allows us to isolate the importance of an internal audit while holding constant...

Studies show that incumbents reduce prices in response to higher entry threats in consumer industries. We provide new insights on the importance of an incumbent firm's reputation to the limit-pricing decision by examining a professional service industry where the supplier's reputation serves as...

We examine the costs and benefits of proactive financial reporting enforcement by the UK Financial Reporting Review Panel. Enforcement scrutiny is selective and varies by sector and over time, yet can be anticipated by auditors and companies. We find evidence that increased enforcement intensity...

In this paper we investigate why auditors fail to report material weaknesses in internal controls (ICMWs) in advance of misstated audited financial statements. To address this question, we analyze Public Company Accounting Oversight Board (PCAOB) proprietary data on audit clients' internal...

This paper examines whether former auditors on the audit committee constrain earnings management in the banking industry. Given the complexity and the size of banking organizations, it can be argued that the audit committees of large banks should possess a higher level of financial expertise...

This paper studies how legal liability due to negligence can weaken or strengthen an auditor's reputation concerns in the client market to provide high audit effort. A negligence liability rule relies on auditing standards to provide a threshold for the level of due care. When the negligence...

This paper studies the impact of public audit oversight on financial reporting credibility. We analyze changes in market responses to earnings news after public audit oversight is introduced, exploiting that the regime onset depends on fiscal year-ends, auditors, and the rollout of auditor...

We examine whether audit fees reflect characteristics of individual executives incremental to known determinants of fees. Using a novel executive effects approach, we find that unexplained audit fees exhibit a statistically and economically significant association with executive effects after...

Auditors' propensity to issue Going Concern Audit Reports (GCARs) is one of the proxies often used for audit quality. Although this propensity is a distinguishing characteristic of auditors, it does not indicate quality according to both theory and practice. In theory, higher-quality auditors...