Prior studies document that firms using a Big 4 auditor have a lower cost of capital than other firms. We extend this literature by examining whether using an industry specialist auditor reduces cost of capital for clients of Big 4 audit firms. We document that firms that use Big 4 auditors that...

The unprecedented migration of Andersen's clients that followed Andersen's indictment in March 2002 potentially placed a large burden on successor auditors' audit resources. We refer to this strain, measured at the local-office level, as auditor capacity stress. We examine the effect of auditor...

Previous evidence of conservatism in Australian financial reporting, as in other countries, is constrained by the absence of a reliable firm-year specific measure. This paper calibrates such a measure using the procedure outlined by Khan and Watts (2007). We show that the C_Score they propose...

The purpose of this paper is to investigate the change in quality of the information environment pre- and post-Enron. We test whether the reputations of all auditors declined as a result of Enron. The impact on the market risk premium is also examined. An information processing model is...

This study tests for differences in audit quality among Big Auditors and between Big Auditors and Small Auditors. The analysis is conducted using four separate quot;auditor erasquot; during the period from January 1980 through December 2003, with each era reflecting the number of Big Auditors in...

This study investigates the link between audit quality and the market's perception of the value of discretion in accounting for Ramp;D costs (Australian GAAP permits Ramp;D costs to be capitalized) and the impact of changes in that discretion. The study examines companies reporting of...

By examining a sample of Australian firms going public over the period 1996 to 2003, we jointly study the impact of audit quality on auditor compensation and IPO underpricing. We find that quality (Big 4) audit firms earn significantly higher fees than Non-Big 4 auditors, and audit quality is...

Enterprise risk management (ERM) is the process of analyzing the portfolio of risks facing the enterprise to ensure that the combined effect of such risks is within an acceptable stakeholder tolerance. While ERM adoption is on the rise, little academic research exists about the costs and...

The framers of the Sarbanes-Oxley Act (SOA) presume that non-audit services lower the quality of financial statements, so they have prohibited auditors from offering most non-audit services. In addition, regulators believe that non-audit services (NAS) may cause the auditor to be perceived as...

Does bad news about one auditor's conduct affect the credibility of all auditors? We examine auditee abnormal stock returns around twenty-five bad news events involving Arthur Andersen LLP's (Andersen) questionable audits of Waste Management, Sunbeam, and Enron. Of these twenty-five windows,...