... agree with the feedback message, perceiving it as consistent and well reasoned. We observe a range of auditor reactions (satisfaction with and motivated to use inspection feedback), responses at the engagement level (improvements to audit quality and inspection risk or impression management...

... the PCAOB claims that its inspection findings and process are designed to increase audit quality, there is limited empirical evidence to support this claim. We examine whether changes in revenue-deficient audit engagements are associated with subsequent year changes in client revenue quality. A revenue...

...Tao Ma; Chi Wan; Yakun Wang; Yuping Zhao ABSTRACT We examine the relationship between audit quality and office-level auditor turnover. Using resumes of over 106,000 Big 4 auditors, we find that audit offices with higher turnover have a greater likelihood of client annual report restatements...

...Ole-Kristian Hope; Cyndia Wang; Yaqian Wu; Min Zhang ABSTRACT Many countries have converged their domestic auditing standards with International Standards on Auditing (ISA). This study provides global empirical evidence on first-order determinants of audit quality by examining whether...

... are only present when employees have lower mobility across professions and geographies, consistent with audit offices’ power in the local labor market explaining the results. Collectively, our findings highlight the importance of labor market power in understanding audit quality. Data Availability: Data...

...Daniel Aobdia; Preeti Choudhary; Noah Newberger ABSTRACT As audits of public companies are labor intensive, require a variety of team members, and involve year-round work, practitioners and academics have increasingly focused on identifying audit production factors that drive audit quality. Using...

...Christine E. Earley; Stephen G. Kuselias; Nikki L. MacKenzie ABSTRACT Regulators and researchers express concern about auditors who leave their firms for employment at their clients, due to lingering relationships which might represent a threat to audit quality. These relationships could...

... audit office improves audit quality and results in an audit fee discount, even after controlling for the product similarity effect, auditors’ overall technological expertise, and industry specialization. Both an increase in audit quality and a decrease in audit fees occur if a client firm exhibits...

... 2023 audit quality auditor style financial-statement comparability SEC comment letters The merits of centralized and decentralized decision making have been discussed extensively in economics and management since Hayek (1945) . A noted feature of centralized decision making (CDM...

... Accounting Oversight Board (PCAOB) enforcement. We find that large audit firm offices improve audit quality following enforcement naming another office within their firm while small firm offices improve following enforcement of local small firm competitors, with these responses varying...

... audit report XBRL footnote disclosure textual analysis market reaction unexpected disclosures audit quality audit fees This study examines the requirement to disclose critical audit matters (CAMs), which became effective in 2019 and is one of the largest expansions of the U.S. audit...

...Karen Ton ABSTRACT Auditor knowledge is a key element in explaining the supply of audit quality, yet understanding of the drivers of this knowledge in the archival literature is limited. This study uses an archival approach to examine whether the sharing of auditors among firms in banking...

...., nonintegrated auditors), we find evidence that challenges this assumption. Specifically, we find ICFR audit quality is higher for nonintegrated audits compared to integrated audits. Moreover, total audit fees are lower for nonintegrated audits, despite higher ICFR audit fees. We appreciate many helpful...

...Evgeny Petrov; Phillip C. Stocken ABSTRACT We study the determinants of auditor industry specialization, the impact of specialization on fees and audit quality, and a regulator's optimal choice of audit standards in the presence of specialization. In industries with correlated firm values...

... that habit strength underlies our results and explore how the audit setting influences the development and enactment of habitual behaviors. JEL Classifications: G10; M40; M41; M42; D80; D91. habits cognitive processing accounting estimates audit quality financial reporting quality goodwill...

... in an industry audited by both merging audit firms, those audited by the audit firm less specialized in that industry belong to the treatment group, while all other clients belong to the control group. We find an economically significant improvement in audit quality (as reflected in a reduction in financial...

...Gladys Lee; Vic Naiker; Christopher R. Stewart ABSTRACT This study examines whether the audit quality of Big 4 audit firms is affected by an audit office's proximity to more target universities for appointing staff auditors. We identify these target universities using a recruitment map of a Big 4...

... too aligned with their client and, thus, lose their objectivity ( Conference Board 2003 ; International Ethics Standards Board for Accountants [IESBA] 2013 ; Ryan et al. 2001 ). Mandatory audit firm rotation is intended to improve audit quality by both bringing a fresh look to the auditing task...

... PCAOB employees hired. However, we find no significant association between the number of former PCAOB employees that a firm hires and improvement in audit quality. These findings suggest that former PCAOB personnel possess valuable knowledge about how to perform and document audit procedures to satisfy...

... reputation and auditors' skeptical action. Taken together, our experiments provide evidence that an auditor's perceived reputation influences their choice to engage in audit quality enhancing behaviors. We acknowledge Lori Bhaskar, Heather Carrasco, Ben Commerford, Mary Kate Dodgson, Cassandra Estep...