Investor Perceptions Of The Earnings Quality Consequences Of Hiring An Affiliated Auditor
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Investor Perceptions Of The Earnings Quality Consequences Of Hiring An Affiliated Auditor
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Author : William R. Baber
language : en
Publisher:
Release Date : 2014
Investor Perceptions Of The Earnings Quality Consequences Of Hiring An Affiliated Auditor written by William R. Baber and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014 with categories.
The Sarbanes-Oxley Act of 2002 (SOX) proscribes so-called “affiliated hires” of financial executives. More specifically, SOX requires that firms wait at least one year before hiring an individual recently employed as a member of the firm's external audit team. The intent of the regulation is to reduce the perceived loss of auditor independence due to affiliated hiring. SOX provisions also require that firms establish fully independent audit committees and disclose the identity of directors with financial expertise. Using a sample of firms that employ new financial executives during the period leading up to SOX, we find that earnings response coefficients (ERCs) computed using quarterly data decline following hires of individuals recently employed by the firm's external auditor, but ERCs do not decline following hires of comparably qualified financial executives not recently employed by the external auditor. We also find that ERC declines following affiliated hires are statistically significant for firms with audit committee compositions inconsistent with SOX regulation, but not for firms with audit committees consistent with SOX regulation subsequently imposed. Further investigation using measures of earnings quality employed in prior studies suggests that the documented differences in ERC changes are attributable to perceived, rather than real, changes in earnings quality following affiliated hires.
International Corporate Governance And Regulation
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Author : Stephen P. Ferris
language : en
Publisher: Emerald Group Publishing
Release Date : 2018-11-01
International Corporate Governance And Regulation written by Stephen P. Ferris 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 2018-11-01 with Business & Economics categories.
Advances in Financial Economics Vol 20 is peer reviewed and focusses on International Corporate Governance.
Auditing Teams
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Author : Mara Cameran
language : en
Publisher: Taylor & Francis
Release Date : 2017-03-31
Auditing Teams written by Mara Cameran and has been published by Taylor & Francis this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017-03-31 with Business & Economics categories.
The recent audit failures which have rocked financial markets worldwide have accentuated the need for a better understanding of the link between risk, control and audit quality; as well as emphasising the need to open the "black box" of the ways auditing firms actually function. Reflecting these imperatives, Auditing Teams unravels the organizational and management issues in audit firms that are key to achieving effectiveness in service provision. Specifically, this key research reflects upon the relevance and dynamics of auditing teams and their impact on auditing quality, and specifically responding to the recent claim from regulators which highlights auditing team characteristics as the source of wide variations in quality. By leveraging different perspectives – auditing, management accounting, organization and psychology – to investigate auditing teams and basing on evidence collected from the professional world, this book will provide a unique insight into the role of auditing teams on audit quality. It will be of great interest to scholars and advanced students in auditing, as well as to practitioners and regulators in the field.
On Informal Institutions And Accounting Behavior
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Author : Xingqiang Du
language : en
Publisher: Springer Nature
Release Date : 2021-01-04
On Informal Institutions And Accounting Behavior written by Xingqiang Du and has been published by Springer Nature this book supported file pdf, txt, epub, kindle and other format this book has been release on 2021-01-04 with Business & Economics categories.
This book focuses on the Chinese context to investigate how informal institutions (Confucian culture and its dimensions, religion, political connections) in China affect accounting behaviors. This book tries to show that cultural influence and religious impacts in China are not trivial and increasingly important, and specifically, informal institutions have its bright and dark sides with regard to its effects on accounting behaviors. This book aims to investigate whether and how informal institutions (Confucian culture and its dimensions, religion, political connections) affect micro-level accounting behaviors, including but not limited to audit quality, financial misstatement, R&D, corporate misconducts, corporate philanthropy and corporate environmental responsibility. This book provides graduate students, scholars and practitioners in the fields of accounting, business administration and religion with an in-depth understanding about how informal institutions as a set of social norms affect micro-level accounting behaviors. First, this book is the first to focus on the Chinese context and investigate the effects of informal institutions on accounting behavior. Second, this book documents systematic evidence to show the bright and dark sides with regard to the relation between informal institutions and accounting behavior in China. Lastly, this book reveals informal institutions can serve as an important mechanism to affect accounting behaviors.
Advances In Accounting Behavioral Research
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Author : Khondkar E. Karim
language : en
Publisher: Emerald Group Publishing
Release Date : 2019-09-30
Advances In Accounting Behavioral Research written by Khondkar E. Karim 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 2019-09-30 with Business & Economics categories.
Focusing on research that examines both individual and organizational behavior relative to accounting, this volume of Advances in Accounting Behavioral Research offers a perspectives on topics such as tax compliance, risk judgement, and affiliation bias.
The Impact Of Revolving Door Practice And Policy On Nonprofessional Investors Perceptions Of Auditor Independence
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Author : Reginald Wilson
language : en
Publisher:
Release Date : 2017
The Impact Of Revolving Door Practice And Policy On Nonprofessional Investors Perceptions Of Auditor Independence written by Reginald Wilson and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017 with categories.
This study investigates whether an ex-auditor's employment with an audit client impairs nonprofessional investors' perceptions of auditor independence, and whether the strength of the United States (US) revolving door policy improves their perceptions of auditor independence. Despite nonprofessional investors owning over one-third of the US equity holdings, the literature has not examined how revolving door policy impacts their perceptions of auditor independence. Two between-subjects experiments examine these issues. The first experiment finds that investors perceive the ex-auditor's integrity to be significant in explaining the firm's decision to manage earnings, irrespective of the firm's previous working relationship with the ex-auditor. The results from experiment two indicate that strengthening the revolving door policy above that of the American Institute of Certified Public Accountants' policy does not improve perceptions of auditor independence. Academics may be interested in triangulating the independence “in appearance” results of this study to the independence “in fact” results of other studies, since the Securities and Exchange Commission asserts that both facets of independence are equally important. The results may also be of interest to academics and practitioners, as prior research suggests that restricting auditors' moves to management positions with the client impairs firms' abilities to hire quality auditors.
Dissertation Abstracts International
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Author :
language : en
Publisher:
Release Date : 2007
Dissertation Abstracts International written by and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2007 with Dissertations, Academic categories.
Management Advisory Services Perceived Auditor Quality And Informativeness Of Earnings
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Author : Ferdinand A. Gul
language : en
Publisher:
Release Date : 1999
Management Advisory Services Perceived Auditor Quality And Informativeness Of Earnings written by Ferdinand A. Gul and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1999 with categories.
This paper tests two related hypotheses regarding the effects of management advisory services (MAS) on earnings ? stock returns relationship. The first hypothesis predicts that the earnings explanatory power for returns is weaker for firms that receive MAS from the external auditors than those firms that do not. This hypothesis is based on the concept of auditor independence which suggests that the provision of MAS by external auditors is expected to adversely affect the credibility and informativeness of audited accounting earnings. The second hypothesis predicts that the adverse effects of MAS on the correlation between earnings and stock returns for firms will be stronger for non-Big 6 auditees than for Big 6 auditees. The second hypothesis is based on the audit quality theory which suggests that Big 6 auditors provide higher quality audits and are expected to mitigate the adverse effects of MAS. Results using data from listed Australian companies provide evidence to support both hypotheses. These findings suggest that concerns regarding investor perceptions of auditor objectivity and independence as a result of the provision of MAS are warranted in specific circumstances.
How Increased Regulatory Oversight Of Non Audit Services Affects Investors Perceptions Of Earnings Quality
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Author : Aasmund Eilifsen
language : en
Publisher:
Release Date : 2012
How Increased Regulatory Oversight Of Non Audit Services Affects Investors Perceptions Of Earnings Quality written by Aasmund Eilifsen and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012 with categories.
In 2003, the Financial Supervisory Authority of Norway (FSA) disclosed that audit firms had violated the legal restrictions for providing non-audit services (NAS). In response, the FSA tightened the NAS regulations. This study examines how regulatory oversight affects the relation between the provision of NAS and earnings response coefficients (ERC). For small, non-industry specialized audit firms, the disclosure of violations in 2003 negatively affected the relationship between NAS and ERC, but the effect was more pronounced in the disclosure year 2003 than in the new regulation period 2004-2008. For Big 5 audit firms, these negative effects are moderated, indicating higher audit quality. Contrary to our expectations, the results of this study suggest that investors perceive audit firm industry specialization as a threat to independence in 2003.
The Relation Between Auditors Fees For Non Audit Services And Earnings Quality
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Author : Richard M. Frankel
language : en
Publisher:
Release Date : 2002
The Relation Between Auditors Fees For Non Audit Services And Earnings Quality written by Richard M. Frankel and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2002 with Auditing categories.
We examine the association between the provision of non-audit services and earnings quality. Because of concerns regarding the effect of non-audit services on financial reporting credibility, the Securities and Exchange Commission recently issued revised auditor independence rules requiring firms to disclose in their annual proxy statement the amount of fees paid to auditors for audit and non-audit services. Using data collected from proxy statements filed between February 5, 2001 and June 15, 2001, we present evidence that firms purchasing more non-audit services from their auditor are more likely to just meet or beat analysts' forecasts and to report larger absolute discretionary accruals. However, the purchase of non-audit services is not associated with meeting other earnings benchmarks. We also find that the unexpected component of the non-audit to total fee ratio is negatively associated with stock returns on the filing date. These results are consistent with arguments that the provision of non-audit services strengthens an auditor's economic bond with the client and that investors price this effect. Keywords: Auditor independence; Auditor fees; Earnings management; Discretionary accruals. JEL Classification: G12, M41, M43, M49, L84.