Multinational corporations (MNCs) hire auditors to assess business partners’ compliance with quality, working conditions, and environmental standards. Independent third-party auditors are widely assumed to outperform second-party auditors employed and thus controlled by MNCs. However,...

Theory suggests that information asymmetry between supplier and customer firms exacerbates the holdup problem. We investigate if an auditor common to the supplier and customer firm improves information flows leading to reduction in the holdup problem. Consistent with this notion, we find that...

Problem Definition and Academic/Practical Relevance: Most supply networks are characterized by firms that source from multiple suppliers and suppliers that serve multiple firms, thus resulting in suppliers who differ in their degree centrality, i.e., the number of firms they supply to. In such...

We study regulation of the auditing profession in a model where audit quality is unobservable and enforcing regulation is costly. The optimal audit standard falls short of the first-best audit quality, and it is increasing in the riskiness of firms and in the amount of funding they seek. The...

This study investigates how customer firms’ data breaches can affect their suppliers' audit fees within the supply chain relationship. Based on the economic bond that exists through the customer firms’ and supplier firms' supply chains, we examine whether data breach incidents of customer...