We study events surrounding ChuoAoyama’s failed audit of Kanebo, a large Japanese cosmetics company whose management engaged in a massive accounting fraud. ChuoAoyama was PwC’s Japanese affiliate and one of Japan’s “Big Four” audit firms. In May 2006, the Japanese Financial Services...

We study events surrounding ChuoAoyama’s failed audit of Kanebo, a large Japanese cosmetics company whose management engaged in a massive accounting fraud. ChuoAoyama was PwC’s Japanese affiliate and one of Japan’s largest audit firms. In May 2006, the Japanese Financial Services Agency...

The benchmark: what should GAAP look like? -- Goodwill hunting: the political economy of accountability for mergers and acquisitions -- The shrinking big N: rule-making incentives of the tightening oligopoly in auditing -- Why fair value is the rule: the changing nature of standard setters --...

Prudent, verifiable, and timely corporate accounting is a bedrock of our modern capitalist system. In recent years, however, the rules that govern corporate accounting have been subtly changed in ways that compromise these core principles, to the detriment of the economy at large. These changes...

We examine how Big N auditors' changing incentives impact their comment-letter lobbying on U.S. GAAP over the first thirty-four years of the FASB (1973-2006). In particular, we focus on the influence of auditors' lobbying incentives arising from two basic factors: managing expected litigation...

We utilize the setting of the audit market consolidation in China to examine the effect of industry-specific knowledge transfer on audit performance. For each audit firm merger, we sort all client companies into the treatment and control groups based on the relative industry expertise of their...