Risk containment efforts are one of the most important activities of public accounting firms in today's litigious and highly competitive environment. Of these efforts, the first quot;line of defensequot; is the decision to accept a client. By effectively screening out risky potential clients,...

This paper examines the relationship between the 1994 change in audit firm legal structure from general partnerships to limited liability partnerships (LLPs) on underpricing in the initial public offering (IPO) market. The change in legal structure of audit firms reduces an audit firm's wealth...

We examine client acceptance and client continuance decisions of a large audit firm to provide empirical evidence on the extent and nature of risk avoidance that the firm uses to purposefully manage its client portfolio. Our results support several key new inferences regarding audit firm...

This paper examines whether risk-management strategies (specifically, the use of specialist personnel and higher billing rates) moderate the effect of risk on client acceptance decisions, thereby assisting auditors in bringing prospective client relationships to acceptable risk/return levels. We...

Presented in this manuscript is a series of three cases that require students to research, analyze, and write about emerging financial accounting issues or extensions of existing technical pronouncements. Specifically, the cases focus on accounts receivable valuation, environmental liabilities...

The purpose of this study is to guide practice and future research by examining contemporary fraud brainstorming practices. Using field data collected from audits conducted during 2013-2014, we investigate team characteristics, attendance and communication, brainstorming structure, timing, and...

In a field experiment, we leverage differences in audit subordinates' job-relevant knowledge about clients, fraud brainstorming objectives, and “normal” audit partner leadership to explore whether and how knowledge moderates the effect of a partner-led intervention on brainstorming processes...

The purpose of this paper is to provide a descriptive analysis of companies' previously uncorrected financial statement misstatements using disclosures recently mandated by Staff Accounting Bulletin No. 108 (SAB 108). We analyze 355 companies that disclose and correct 792 misstatements in their...

We study the role of reputation in auditor-client matching. Using 1.2 million employment records from US broker-dealers, we find that broker-dealer clients of the same auditor have similar financial adviser misconduct profiles. Our estimates indicate that variation in client misconduct behavior...

We examine the association of Big 4 audit partners' public-client specialization with client companies' audit quality. Using a sample of NASDAQ OMX companies in Finland, we identify the audit partner assigned to each public-client engagement. We expect that partners with greater public-client...