This study provides novel information about the consequences of the Sarbanes-Oxley Act (SOX) by documenting differential audit fee shocks accompanying implementation of SOX 404(b) internal control tests and reports for clients in three size categories: large accelerated filers (LAFs), small...

Drawing on social norms and social learning theories, this study investigates the influences of peer (similar) firms' prior choices on whether or not a client chooses to affiliate with a “social norm” audit office in its metropolitan area, following auditor turnover. The office in a metro...

We propose a new audit supplier competition construct: the Office-Client Balance (OCB), which consists of the relative abundance of suppliers (competing audit offices) and customers (audit clients) in a metropolitan (metro) area. From this construct, we derive a metro-level audit competition...

This study attempts to provide a comprehensive understanding of the interrelationships among chief financial officers' (CFOs') professional qualifications, SOX Section 404 internal control weakness, CFOs' turnover, CFOs' qualification improvement, and remediation of material weaknesses. We find...

The objective of this paper is to provide preliminary evidence whether SFAS No. 109 tax data might be useful in distinguishing between firms that do versus do not engage in earnings overstatement fraud (hereafter fraud). We examine the associations of various versions of deferred tax expense...

This study examines Big N auditors' client risk management strategy in response to the risk of upward (i.e., income-increasing) earnings management in the post-SOX era. Specifically, we empirically study the relation between clients' signed discretionary accruals and subsequent audit pricing and...

SEC Staff Accounting Bulletin No. 74 (SAB 74, U.S. SEC 1987) requires registrants to provide information about the predicted financial statement effect of an enacted but not yet adopted accounting standard. The objectives of SAB 74 disclosures are to inform users the registrant will be required...

We investigate the association of location-specific severity of the 2019 Coronavirus pandemic (COVID) with changes in audit fees and delays following the pandemic’s onset. Employing data on lengths of stay-at-home (S@H) mandates to proxy for COVID’s disrupting effects on audits, we find that...

We examine the impact of financial restatements on managers' subsequent earnings forecasts. We argue that restatements create conflicting incentives. One incentive is to repair manager reputations as information providers by providing more and better guidance via earnings forecasts. The opposing...

Positive accounting theory predicts that conservative financial reporting averts GAAP-based litigation. However, very little empirical evidence addresses whether and how accounting conservatism provides these benefits. Using a sample of lawsuits against public companies for alleged violations of...