This paper derives the impacts of legal system characteristics and auditing standards on auditor behavior (audit quality), and analyzes the determination of optimal auditing standards under different legal regimes. Legal regimes are characterized by differences in the uncertainty concerning the...

This paper develops a theory of the negotiating positions, or preferences over auditing standards, of the interest groups that may set such standards. Specifically, we consider how the preferences of auditors as standard setters may differ from the preferences of investors. We represent auditing...

We use the release by the Public Company Accounting Oversight Board on May 18, 2010 showing its oversight of certain foreign auditors has been denied as a natural experiment to examine investors’ early valuation of the PCAOB’s international audit oversight on U.S. listed foreign companies....