All My Rowdy Friends : The Effect of Super Bowl Hosting on Audit Timing

We use the Super Bowl as a setting to explore the impact of a non-financial, exogenous source of distraction on audit efficiency/timeliness. The magnitude of festivities related to hosting the Super Bowl, combined with the game falling during the audit “busy season,” results in an ideal setting to examine how audit firms navigate short-term, anticipated audit team capacity constraints. Using 16 years of financial reporting data, we test the impact of Super Bowl hosting and find it results in less efficient audits (approximately 2 days, in terms of audit report lag) and less timely SEC (10-K) filings. However, we find no impact of Super Bowl hosting on audit fees, earnings announcement timeliness, or audit quality (using four different proxies). Our study contributes to our understanding of the costs of Super Bowl hosting, provides empirical evidence that exogenous distraction reduces efficiency in a large organizational setting, underscores the importance of high quality human resource inputs to positive audit outcomes, and provides evidence that audit firms accept lower audit efficiency in response to short-term, anticipated capacity constraints