While the shareholder benefits of audits are well documented, evidence on whether audits can facilitate opportunistic behavior by corporate insiders is scarce. In this paper, we examine whether the audit process facilitates one particular form of opportunism: informed trading by corporate...

Prior work suggests that greater earnings disaggregation in financial statements leads to favorable market outcomes. This perspective is based on a fundamental presumption that the disaggregation separates earnings components with heterogeneous characteristics. We hypothesize that the...

Over two-thirds of United States public companies now announce annual earnings prior to (versus with, or after) audit completion. We expect this practice has potential to increase pressure in auditor/client negotiations over post-announcement audit adjustments. In a controlled experiment with...

The quality of financial statement (FS) audits integrated with audits of internal controls over financial reporting (ICFR) depends upon the quality of ICFR information used in, and its integration into, FS audits. Recent research and PCAOB inspections find auditors underreport existing ICFR...

We document that the conventional disclosure practice of ‘stand-alone' earnings announcements (EAs), which preempt 10-K filings, is steadily disappearing over time. Instead, firms are increasingly adopting the disclosure strategy of releasing the EA concurrently with the 10-K. We first examine...

We examine how third party verification of internal controls over financial reporting (ICFR) affects bank supervision by exploiting a change in size thresholds for required FDICIA-related internal control audits. We document that affected banks have higher reported levels of non-performing loans...

Ineffective internal controls over financial reporting often relates to a lack of qualified personnel with sufficient accounting and technical expertise. In this study, we examine whether firms respond to internal control failures by increasing their demand for specific accounting and finance...