Purpose – The purpose of this paper is to investigate the impact of certain audit quality attributes, namely auditor size, auditor industry specialization and auditor tenure on a client firm's cost of equity capital. Design/methodology/approach – The paper uses empirical data to construct a...

We investigate the effects of audit quality attributes related to the auditor and the auditor-client relationship on the firm's cost of capital. We further examine whether these effects differ according to client size. We focus on two auditor characteristics; auditor size and auditor industry...

We provide evidence on the relation between office-level client importance and abnormal accruals in a pre-SOX period and a post-SOX period. We find that in the pre-SOX period the relation is not significant for the overall sample. However, it is significantly positive for the sub-sample of firms...

Purpose – Research has shown that firms successfully pursuing either a cost leadership or a differentiation strategy are better able to gain competitive advantages over other firms and accordingly achieve superior performance. Thus, if firms actually do realize superior performance based on...

We investigate whether firms reporting internal control weaknesses (ICW) over financial reporting under Section 404 of Sarbanes-Oxley Act, on average, have accruals that exhibit lower future performance (earnings and cash flow) predictive properties compared to firms without ICWs. We also...

Purpose – The purpose of this paper is to investigate the impact of the Sarbanes-Oxley Act (SOX) on market-based measures of earnings quality and cost of capital. Design/methodology/approach – The paper uses empirical data to determine measures for the market's perception of earnings quality...

Purpose – The purpose of this paper is to investigate the way in which CEOs are shielded or rewarded for incurring R&D expenses. Strategic expenses such as R&D yield returns over a long period of time even though GAAP requires them to be written off in the period they are incurred. Going...

Whisper numbers--unofficial forecasts of earnings per share--were widely reported alongside analyst forecasts and actual earnings in the late 1990s. Bagnoli et al. (1999) showed that whispers appeared to be more accurate than analyst earnings forecasts for a small sample of high-tech firms. We...

We investigate the relationship between firm strategy and the use of performance measures in executive compensation. Our analysis shows that there is an increased emphasis on sales in the determination of executive compensation for firms pursuing a cost leadership strategy, which seek to achieve...