ABSTRACT
This study examines whether bank audit regulations impact bank reporting quality. Using a multi-country panel of publicly traded banks, we find that regulations targeting auditor qualifications and independence improve bank reporting quality. In contrast, regulations that impose greater supervisory oversight of external auditors have little or even an adverse effect on bank reporting quality. Cross-sectional analysis further shows that the effects of bank audit regulations are concentrated among banks where supervisory regime is less independent. Our results hold after controlling for bank regulations pertinent to financial reporting and disclosure, the adoption of International Financial Reporting Standards, and time-varying country-level institutional characteristics. Overall, our findings suggest that audit regulations matter and their impact on bank reporting quality is sensitive to the type of audit regulation.
JEL Classifications: G21; G38; M41; M42.
Data Availability: The data used in this study are publicly available from the sources indicated in the text.
