We examine how adjustments to earnings during year-end audits affect measures of earnings quality. There are four key findings. First, audit adjustments cause earnings to become smoother and more persistent. Second, the adjustments result in higher accrual quality. Third, audit adjustments have...

Acquirers are motivated to overstate earnings prior to stock-financed acquisitions. We hypothesize that audits help to detect and correct such overstatements. We test this using a difference-in-differences design, which compares audit adjustments to earnings for stock-financed and cash-financed...

Using proprietary data obtained from a local tax office in China, we examine the determinants of corporate tax audits and the consequences of those audits. We find that the tax authority is more likely to select a firm for an audit when the firm has a lower effective tax rate, a higher book-tax...

In China, submitting a claim for R&D tax deductions increases the likelihood that a firm will be scrutinized by the tax authorities. We argue that tax aggressive firms are keen to avoid the oversight of the tax authorities and so they are less likely to submit claims for R&D tax deductions...

Although "good" companies have incentives to signal their types by listing in the strict regulatory environment of the US, there have been an unprecedented number of recent accounting frauds by US-listed Chinese companies. We argue that the traditional bonding argument failed for US-listed...