This paper reexamines the long-standing issue of whether the consulting fees earned by auditors affect their independence. The evidence in the United States is far from settled in this regard and continues to vex academics, professionals, and policy makers alike. Our model predicts a negative...

This study examines the effect of managerial fiduciary duties on the likelihood of firms receiving going concern (GC) opinions from their auditors. We exploit an influential 1991 legal ruling that expanded fiduciary duties of corporate directors and officers in favor of creditors for...

We examine the audit pricing consequences of auditor inspections under the public oversight regime in the EU. Employing a staggered difference-in-differences design, we document an inspections audit fee premium during the post-inspection period when companies’ auditors are inspected by the...

This article comments on the Accounting and Auditing Law of the Republic of Georgia.The Georgian law “On Accounting and Auditing of Financial Reporting” was signed into law in 2012. Some of its provisions became effective immediately, while others became effective in January 1, 2013. The law...

In this paper, we document 45 specific allegations related to audit deficiencies based on GAAS, as detailed in 141 AAERs and 153 securities class action lawsuits over the violation years 1978–2016. Next, we use these allegations to validate existing popular proxies of audit quality. Of all the...

Throughout this study the term “expectation gap” refers to the difference between (1) what the public and financial statement users believe the responsibilities of auditors to be, and (2) what auditors believe their responsibilities are, as in McEnroe and Martens, 2001 (hereafter MM 2001)....

This paper examines the 2017 audit inspection scandal involving KPMG — one of the fewbreaches of “tone at the top” at a Big 4 audit firm — to study whether and how the scandal affectsKPMG and its clients. From the federal court trial related to the scandal, we construct a novel dataset...

The Financial Reporting Enforcement Panel (FREP) has been examining financial reporting of companies listed in the regulated market in Germany since 1.7.2005. The paper analyzes the enforcement disclosure quality between 2006 and 2008 by comparing the published activity reports of the panel with...

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 survey 170 inspectors, representing 27% of the inspection staff, from auditor public oversight boards (POBs) in 20 countries to understand whether, how, and why auditors respond to POB oversight. We find that a large majority of inspectors believe that auditors frequently respond to their...