Audit Firm Tenure And The Equity Risk Premium
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Audit Firm Tenure And The Equity Risk Premium
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Author : Jeff P. Boone
language : en
Publisher:
Release Date : 2010
Audit Firm Tenure And The Equity Risk Premium written by Jeff P. Boone and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010 with categories.
Although investor perceptions of audit quality play a critical role in maintaining systemic confidence in the integrity of financial accounting reports (Levitt 2000), prior research on the effects of auditor tenure from an investor perspective is relatively sparse. In this study, we investigate whether investors price audit firm tenure for Big Five audits by examining the relation between tenure and the ex ante equity risk premium, i.e., the excess of the company-specific ex ante cost of equity capital over the risk-free interest rate. Based on prior research, whereas the quot;auditor learningquot; argument predicts that audit quality will change in only one direction (i.e., improve) with tenure, the quot;auditor-client closenessquot; argument suggests that audit quality may decrease beyond some (albeit unspecified) length of tenure due to impaired auditor independence and objectivity. Consistent with prior theoretical arguments, we find some evidence of a non-linear relation between audit firm tenure and the ex ante equity risk premium, i.e., we find that the equity risk premium decreases in the early years of tenure but increases with additional years of tenure. These findings persist after we control for well-known risk factors and company characteristics that have been shown in prior research to be related to the cost of equity capital. The implications of our findings are discussed.
Audit Tenure And The Equity Risk Premium
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Author : Rana Baker
language : en
Publisher: LAP Lambert Academic Publishing
Release Date : 2010-10
Audit Tenure And The Equity Risk Premium written by Rana Baker and has been published by LAP Lambert Academic Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010-10 with categories.
it is observed that most firms in Jordan retain the audit firm for long period of time, this long auditor-client relationship can have adverse effect on perceived audit quality; as long-term relationships between companies and their auditors create a level of closeness that impairs auditor independence and reduces audit quality, this close relationship may create a conflict of interest for the auditor and can adversely affect the auditing process (opinion/integrity); The auditor could identify closely with management's perspective and not exhibit sufficient professional skepticism. In addition, management can take advantage of the auditor's conflict by making a personal appeal for compassion and support. This leads us to the following question: Does long audit firm tenure affect perceived audit quality? This study will investigate whether audit firm tenure affect perceived audit quality by examining the relation between audit firm tenure and the client -specific equity risk premium -that is, the excess of client specific cost of equity capital over the risk free interest rate.
Understanding Accounting Academic Research
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Author : Stephen R. Moehrle
language : en
Publisher: Emerald Group Publishing
Release Date : 2013-06-25
Understanding Accounting Academic Research written by Stephen R. Moehrle and has been published by Emerald Group Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013-06-25 with Business & Economics categories.
Accounting scandals such as Enron and WorldCom ushered in several regulatory overhauls including Sarbanes-Oxley. This monograph summarizes and synthesize a decade of academic research to develop an evolving dominant explanation around these myriad changes.
Essays On The Quality Of Audited Financial Statements
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Author : Ulf Mohrmann
language : en
Publisher: Logos Verlag Berlin GmbH
Release Date : 2016-02-15
Essays On The Quality Of Audited Financial Statements written by Ulf Mohrmann and has been published by Logos Verlag Berlin GmbH this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016-02-15 with Business & Economics categories.
The dissertation consists of four essays on the quality of audited financial statements. The first analysis investigates the association between several regulations of the audit market and earnings characteristics. The second essay differentiates between different drivers of audit quality after an auditor change by comparing the effects of voluntary and mandatory auditor changes. The third study analyses the different strategies of Big4 and non-Big4 auditors in dealing with Level 3 fair values. The fourth part examines banks' valuation behavior concerning Level 3 fair values.
Advances In Accounting
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Author : Philip M J Reckers
language : en
Publisher: Elsevier
Release Date : 2006-07-04
Advances In Accounting written by Philip M J Reckers and has been published by Elsevier this book supported file pdf, txt, epub, kindle and other format this book has been release on 2006-07-04 with Business & Economics categories.
The twenty-second volume of Advances in Accounting continues to provide an important forum for discourse among and between academic and practicing accountants on issues of significance to the future of the discipline. Emphasis continues to be placed on original commentary, critical analysis and creative research – research that promises to substantively advance our understanding of financial markets, behavioral phenomenon and regulatory policy. Technology and aggressive global competition have propelled tremendous changes over the two decades since AIA was founded. A wide array of unsolved questions continues to plague a profession under fire in the aftermath of one financial debacle after another and grabbling with the advent of international accounting standards. This volume of Advances in Accounting not surprisingly includes several articles reflective on auditor independence, auditor tenure, auditor rotation and non-audit service fees. This volume also looks at challenges facing the academic community with respect to pressures placed on faculty to publish; a data driven commentary is provided by the in-coming editor of the European Accounting Review. Other papers examine the use of financial data to estimate risk premiums, and measure the operating efficiency of firms; and re-examine market reaction to quarterly earnings. AIA continues its commitment to the global arena by publishing several papers with an international perspective. As never before the accounting profession is seeking ways to reinvent itself and recapture relevance and credibility. AIA likewise continues to champion forward thinking research. *Addresses the role of the auditor *Investigates how financial data is represented, used, and received *Scope of content is international
Adoption Of Anglo American Models Of Corporate Governance And Financial Reporting In China
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Author : Huiying Wu
language : en
Publisher: Emerald Group Publishing
Release Date : 2014-01-16
Adoption Of Anglo American Models Of Corporate Governance And Financial Reporting In China written by Huiying Wu and has been published by Emerald Group Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014-01-16 with Business & Economics categories.
This monograph examines the adoption of Anglo-American models of corporate governance and financial reporting in China. It shows how the loose coupling between regulations and actual operations is shaped by the interplay between institutional pressures and organizations conflicts of interest and power dependence within the local context.
Business Periodicals Index
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Author :
language : en
Publisher:
Release Date : 2008
Business Periodicals Index written by and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2008 with Business categories.
Product Differentiation In Auditing
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Author : Dan A. Simunic
language : en
Publisher: Canadian Certified General Accountants' Research Foundation = Fondation de recherche de l'Association des comptables généraux licenciés du Canada
Release Date : 1987
Product Differentiation In Auditing written by Dan A. Simunic and has been published by Canadian Certified General Accountants' Research Foundation = Fondation de recherche de l'Association des comptables généraux licenciés du Canada this book supported file pdf, txt, epub, kindle and other format this book has been release on 1987 with Business & Economics categories.
A fundamental question with respect to the market for audit services is whether or not such services are homogeneous across suppliers ... In this monograph, we review the basic principles and findings concerning differentiated product markets as they have been developed in the economic literature. Using Lancaster's characteristics framework, we posit that the audit service contains several attributes which are valued by top management. A key attribute is "credibility", which is communicated by an audit firm's brand name and is identified with the power of an auditor's test ... We posit that, along with other product characteristics, the power of test varies systematically across audit firms. Hypotheses concerning the demand for different audit service specifications (qualities) are developed in a context where companies are changing their capital structure through an initial public offering of common shares. These hypotheses are tested using a sample of 469 U.S. corporations which first "went public" during 1981. The results are consistent with the existence of differential audit services.
Audit Firm Tenure And Audit Quality
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Author : Li Zheng Brooks
language : en
Publisher:
Release Date : 2013
Audit Firm Tenure And Audit Quality written by Li Zheng Brooks and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013 with categories.
We propose that audit quality is likely to increase in the earlier years due to a Learning Effect and in later years it decreases due to a Bonding Effect. Adopting a quadratic model, we find that the average turning point is between 12 to 16 years for a large sample of U.S. firms. With an average tenure of 9 years in our sample, these findings imply that mandatory auditor firm rotation may not be necessary. Further, we find that the turning point varies by auditor - it is longer for non-Big N auditors, non-specialist auditors, and auditors with high client importance, and the deterioration of audit quality exists in low litigation industries only, consistent with the Bonding Effect explanation. Moreover, we find the turning point gets longer in the post-SOX period. Our results have implications for the current debate on mandatory audit firm rotation.
Transforming Corporate Governance And Developing Models For Board Effectiveness
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Author : Yasser, Qaiser Rafique
language : en
Publisher: IGI Global
Release Date : 2020-12-25
Transforming Corporate Governance And Developing Models For Board Effectiveness written by Yasser, Qaiser Rafique and has been published by IGI Global this book supported file pdf, txt, epub, kindle and other format this book has been release on 2020-12-25 with Business & Economics categories.
Corporate governance can be considered as an environment of trust, ethics, moral values, and confidence as a synergistic effort of all the constituent parts, including stakeholders, the public, service provides, and the corporate sector. The actions of an organization and the consequences of those actions has become increasingly concerned with corporate governance. As such, it is essential to examine the latest concepts and trends that can lead to the development of effective models for corporate boards. Transforming Corporate Governance and Developing Models for Board Effectiveness is an essential reference source that contains forward-thinking research intended to facilitate effective, entrepreneurial, and prudent management that can deliver the long-term success of the company. The book discusses the different theories and practices surrounding boards of directors’ responsibilities and innovative strategies for the governance of their companies that allow them to become and remain successful. Highlighting topics that include board diversity and independence, business ethics, and family business governance, this book is intended for corporate boards, board of directors, executives, managers, business professionals, academicians, researchers, policymakers, and students.