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What If Auditing Was Not Low Margin Business Auditors And Their Ipo Clients As A Natural Experiment
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Book Synopsis What If Auditing Was Not 'Low-Margin Business'? Auditors and Their IPO Clients as a Natural Experiment by : Ramgopal Venkataraman
Download or read book What If Auditing Was Not 'Low-Margin Business'? Auditors and Their IPO Clients as a Natural Experiment written by Ramgopal Venkataraman and published by . This book was released on 2015 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: We use the IPO setting to examine the relation between the auditor's exposure to legal liability, audit fees and audit quality. Consistent with the increase in litigation liability that an IPO audit implies, we find that auditors earn much higher fees for IPO engagements than for first-year, post-IPO engagements. Moreover, these higher fees are strongly associated with our proxy for the auditor's litigation exposure under the 1933 Act, the size of the IPO. In addition, we find that pre-IPO accruals are significantly less than first-year post-IPO accruals. Overall, we find no evidence to suggest that IPO companies engage in opportunistic earnings management. Taken together, IPOs do not appear to be quot;low-marginquot; engagements for auditors, nor does it seem that auditors permit their IPO clients an increase in accounting discretion.
Book Synopsis Finance and Sustainability by : Agnieszka Bem
Download or read book Finance and Sustainability written by Agnieszka Bem and published by Springer. This book was released on 2018-07-01 with total page 283 pages. Available in PDF, EPUB and Kindle. Book excerpt: This volume covers the proceedings of the ZAFIN Finance and Sustainability conference, organized by the Wroclaw University of Economics in cooperation with the Corvinus University of Budapest and the University of Economics in Prague. The authors analyze a variety of issues related to recent finance problems, including corporate finance, public finance, monetary and fiscal policy issues, and risk management. The book also discusses topics related to sustainable finance, the transition to green economies, corporate sustainability and sustainable development. The target audience for this book includes researchers at universities and research and policy institutions, graduate students, and practitioners in economics, finance and international economics working for private or government institutions.
Book Synopsis Earnings Accruals and Real Activities Management around Initial Public Offerings by : Peter Ising
Download or read book Earnings Accruals and Real Activities Management around Initial Public Offerings written by Peter Ising and published by Springer Science & Business Media. This book was released on 2013-10-06 with total page 242 pages. Available in PDF, EPUB and Kindle. Book excerpt: The beginning of the new millennium was characterized by company scandals in accounting around the world. A transparent and fair presentation of financial statements is beneficial for capital market participants. Especially around initial public offerings different incentives of these players exist to influence financial statements in diverse aspects. Therefore, studies of earnings management try to identify abnormal behavior. Peter Ising covers additional aspects to shed light on substantial drivers of discretionary reporting behavior around going public. Factors like influence on real activities, industry affiliation, and specific years in the IPO process add further insight to this theoretical and practical topic. The dependence on these factors is high and confirms that company specifics are important for interpretation of financial results.
Book Synopsis Sharing Suppliers and Information Spillovers: The Case of the Auditor by : Daniel Aobdia
Download or read book Sharing Suppliers and Information Spillovers: The Case of the Auditor written by Daniel Aobdia and published by . This book was released on 2012 with total page 100 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation provides empirical evidence consistent with auditors transferring some information from one client to another and, as a consequence, with same industry rivals being reluctant to share the same auditor due to information spillover concerns. In the first essay, using exogenous shocks to the auditing industry, including large auditor mergers and the collapse of Arthur Andersen, I document a reluctance of rivals to engage the same auditor due to information spillover concerns. This reluctance is more evident in concentrated industries where barriers to mobility, proxied by differentiation and capital expenditure levels, are low. More secretive manufacturing firms are also more reluctant to share their auditor with a rival. I also find weak evidence that the concern for information spillovers is lessened when rivals are dissimilar in terms of sales or when they are headquartered in the same state, where other conduits for information spillover, including employee turnover, are present. Last, I find some evidence that auditors extract rents from clients concerned about information spillovers. In the second essay, I present evidence consistent with auditors being a conduit for information spillovers. My results indicate that firms sharing the same auditor are more alike in their investment, research and development, advertising and SG&A decisions compared to firms not sharing the same auditor. Causality is established using the collapse of Arthur Andersen as a natural experiment that broke channels for information spillovers for former clients of the auditing firm. Results are still valid after the enactment of Sarbanes-Oxley (SOX), indicating that the core auditing practice of auditors is a conduit for information spillovers. I also find some evidence that information spillovers are more prominent at the auditor office level. Last, additional evidence from patent citations indicates that information spillovers through sharing the same auditor may lead to dissemination of technological innovations among client firms.
Book Synopsis Auditor's Public Offering Experience and Lawsuits by : Nargiz Abdullayeva
Download or read book Auditor's Public Offering Experience and Lawsuits written by Nargiz Abdullayeva and published by . This book was released on 2022 with total page 63 pages. Available in PDF, EPUB and Kindle. Book excerpt: Prior literature suggests that public offering clients of Big 4 auditing firms are more likely to get sued due to their "deep pockets" which might trigger the filing of lawsuits. However, it is not clear whether variation in auditor knowledge and experience among Big 4 audit offices might affect the litigation risk. In this paper, I examine whether auditor experience in public offerings measured at the audit office level is associated with lawsuit incidence related to initial and secondary public offerings. Using a sample of U.S. IPOs and SEOs audited by Big 4 audit firms, I find that IPO clients of the auditors with higher IPO experience are less likely to get sued. Similarly, I find that SEOs audited by Big 4 offices with higher SEO experience are associated with lower lawsuit incidence. I also investigate whether auditors might use their SEO and IPO experience to mitigate litigation risk interchangeably for IPO and SEO audits, respectively. I find that SEO experience is negatively associated with lawsuit incidence in the IPO sample, but that association disappears after controlling for auditor IPO experience. However, I do not find any association between auditor IPO experience and SEO-related lawsuits. I also examine the effect of auditor IPO and SEO experiences on dismissal rate among lawsuits related to IPOs and SEOs,respectively. My results suggest that the IPO experience of auditors has a positive impact on the dismissal rate of lawsuits related to IPOs. However, I do not find a significant association between the SEO experience of auditors and the dismissal rate of SEO-related lawsuits.
Book Synopsis Auditor Going Concern Reporting by : Marshall A. Geiger
Download or read book Auditor Going Concern Reporting written by Marshall A. Geiger and published by Routledge. This book was released on 2021-06-09 with total page 160 pages. Available in PDF, EPUB and Kindle. Book excerpt: Auditor reporting on going-concern-related uncertainties remains one of the most challenging issues faced by external auditors. Business owners, market participants and audit regulators want an early warning of impending business failure. However, companies typically do not welcome audit opinions indicating uncertainty regarding their future viability. Thus, the auditor’s decision to issue a "going concern opinion" (GCO) is a complex and multi-layered one, facing a great deal of tension. Given such a rich context, academic researchers have examined many facets related to an auditor’s decision to issue a GCO. This monograph reviews and synthesizes 182 recent GCO studies that have appeared since the last significant review published in 2013 through the end of 2019. The authors categorize studies into the three broad areas of GCO: (1) determinants, (2) accuracy and (3) consequences. As an integral part of their synthesis, they summarize the details of each study in several user-friendly tables. After discussing and synthesizing the research, they present a discussion of opportunities for future research, including issues created or exacerbated as a result of the global COVID-19 pandemic. This monograph will be of assistance to researchers interested in exploring this area of auditor responsibility. It will also be of interest to auditing firms and individual practitioners wanting to learn what academic research has examined and found regarding this challenging aspect of audit practice. Auditing standard-setters and regulators will find it of interest as the authors review numerous studies examining issues related to audit policy and regulation, and their effects on GCO decisions. The examination of GCO research is extremely timely given the financial and business disruption caused by the worldwide COVID-19 pandemic. This unprecedented global event has caused companies, auditors and professional bodies to revisit and reassess their approach to going concern, and to think even more deeply about this fundamental business imperative.
Book Synopsis United States and European Union Auditor Independence Regulation by : Christiane Strohm
Download or read book United States and European Union Auditor Independence Regulation written by Christiane Strohm and published by Springer Science & Business Media. This book was released on 2007-12-11 with total page 247 pages. Available in PDF, EPUB and Kindle. Book excerpt: Christiane Strohm investigates the effects of the Sarbanes-Oxley-Act and the revised 8th EU-Directive on auditing. She shows that there is a difference in the communication and safeguarding effects of a regulation, depending on the precision of its wording and that safeguarding effects also depend on auditors' monetary incentives and on perceived costs of litigation.
Book Synopsis Do Political Connections Add Value to Audit Firms? Evidence from IPO Audits in China by : Zhifeng Yang
Download or read book Do Political Connections Add Value to Audit Firms? Evidence from IPO Audits in China written by Zhifeng Yang and published by . This book was released on 2012 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Audit firms become politically connected when their partners are appointed to the regulatory committee that screens prospective initial public offering (IPO) companies. Connections with regulators may enable audit firms to gain insights into the regulatory process which can help their clients prepare IPO applications, and lobby for favorable regulatory decisions. These arguments suggest that connections with regulators may help audit firms reduce IPO rejection risk for their clients, thus allowing them to charge higher IPO audit fees and gain more IPO clients. Regulatory committee appointments may benefit non-top tier audit firms more than they do top tier audit firms because reputational concerns are likely to encourage the latter to refrain from helping their clients raise the likelihood of passing the IPO screening process to a level higher than that justified by their clients' fundamentals. Consistent with these arguments and predictions, the findings of this study show that after their partners are appointed to the IPO screening committee, non-top audit firms significantly increase their IPO audit fees and IPO market share, and reduce IPO rejection risk for their clients, whereas top tier audit firms do not.
Author : Publisher : ISBN 13 :1948306336 Total Pages :128 pages Book Rating :4.9/5 (483 download)
Download or read book written by and published by . This book was released on with total page 128 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Are Voluntary Internal Controls-related Audit Report Disclosures Informative in IPOs?. by :
Download or read book Are Voluntary Internal Controls-related Audit Report Disclosures Informative in IPOs?. written by and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Behind Closed Doors: What Company Audit is Really About by : V. Beattie
Download or read book Behind Closed Doors: What Company Audit is Really About written by V. Beattie and published by Springer. This book was released on 2001-03-13 with total page 326 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book takes us 'behind closed doors' to uncover the nature of the relationship between the audit engagement partner and the company finance director in major listed companies. Based on matched interviews with finance directors and audited engagement partners of six listed companies, the book uncovers both sides' perceptions of how contentious and non-contentious issues are resolved. New insights are provided about the workings of the audit process itself, how negotiation is conducted and the personal relationships and balance of power between the auditors and the board of directors.
Book Synopsis Statutory Auditors’ Independence in Protecting Stakeholders’ Interest by : Mitrendu Narayan Roy
Download or read book Statutory Auditors’ Independence in Protecting Stakeholders’ Interest written by Mitrendu Narayan Roy and published by Springer. This book was released on 2018-07-20 with total page 538 pages. Available in PDF, EPUB and Kindle. Book excerpt: Corporate failures and accounting scandals have shaken the foundations of investors’ confidence in the transparency, integrity and accountability of corporations and financial markets. There have also been public disquiet about the role of professional auditors and audit firms, who had been associated with these corporate scandals. Written from a global perspective, the book assists in understanding the gravity of independent attitude of statutory auditors in protecting stakeholders’ interest and examines the effectiveness of the existing standards and other legal and regulatory requirements in enforcing statutory auditors’ independent engagement. It then suggests modifications in those regulations. The study has been made through seven chapters in order to address empirically statutory auditors’ independence in protecting stakeholders’ interest. Primary audiences of the book are researchers in finance and control, students, and professionals in the field of accounting and auditing.
Book Synopsis Corporate Scandal and Impact on the Audit Profession by : Carol Nganga
Download or read book Corporate Scandal and Impact on the Audit Profession written by Carol Nganga and published by GRIN Verlag. This book was released on 2014-09-10 with total page 12 pages. Available in PDF, EPUB and Kindle. Book excerpt: Seminar paper from the year 2012 in the subject Business economics - Economic Policy, grade: A, The University of Liverpool, language: English, abstract: The economic crisis in Europe and earlier credit crisis during 2008 have opened up the debate on the role of auditors and the corporate houses are carrying out their activities. The 2008 mortgage crisis resulted in many financial companies going bankrupt while some closing down permanently. The effect of crisis was felt world-over and one Indian company, Satyam Computers went bankrupt and this is a particular case where the role of auditors from PriceWaterCoopers House, India was questioned (The Indian Express, 2012). Larsson (2005) stated that major corporate frauds and scandals are regularly followed by the debate concerning the aim and scope of auditing. While there were such scandals earlier, this paper analyses one such corporate scandal and how it has affected and changed the profession of auditors in coming years.
Book Synopsis Auditing, Trust and Governance by : Reiner Quick
Download or read book Auditing, Trust and Governance written by Reiner Quick and published by Routledge. This book was released on 2007-10-17 with total page 302 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this important new book, the European Auditing Research Network gives a timely appraisal of the regulatory environment for financial accounting and auditing in the wake of a series of high profile scandals involving major corporations.
Book Synopsis Auditor Independence, Conflict of Interest, and the Unconscious Intrusion of Bias by : Don A. Moore
Download or read book Auditor Independence, Conflict of Interest, and the Unconscious Intrusion of Bias written by Don A. Moore and published by . This book was released on 2003 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: Information about the financial health of public companies provided by auditors ideally allows investors to make informed decisions and enhances the efficiency of financial markets. However, under the current system auditors are hired and fired by the companies they audit, which introduces incentives for biases that favor the audited companies. Three experiments demonstrate bias in auditors' judgments, and show that these biases are not easily corrected because auditors are not fully aware of them. The first experiment demonstrates that the judgments of professional auditors tend to be biased in favor of their clients. The second and third experiments explore more closely the psychological processes underlying the bias. The results suggest that the closeness of the relationship between auditor and client may have a particularly strong biasing influence on auditors' private judgments.
Book Synopsis Final Accounting by : Barbara Ley Toffler
Download or read book Final Accounting written by Barbara Ley Toffler and published by Currency. This book was released on 2003-03-04 with total page 288 pages. Available in PDF, EPUB and Kindle. Book excerpt: A withering exposé of the unethical practices that triggered the indictment and collapse of the legendary accounting firm. Arthur Andersen's conviction on obstruction of justice charges related to the Enron debacle spelled the abrupt end of the 88-year-old accounting firm. Until recently, the venerable firm had been regarded as the accounting profession's conscience. In Final Accounting, Barbara Ley Toffler, former Andersen partner-in-charge of Andersen's Ethics & Responsible Business Practices consulting services, reveals that the symptoms of Andersen's fatal disease were evident long before Enron. Drawing on her expertise as a social scientist and her experience as an Andersen insider, Toffler chronicles how a culture of arrogance and greed infected her company and led to enormous lapses in judgment among her peers. Final Accounting exposes the slow deterioration of values that led not only to Enron but also to the earlier financial scandals of other Andersen clients, including Sunbeam and Waste Management, and illustrates the practices that paved the way for the accounting fiascos at WorldCom and other major companies. Chronicling the inner workings of Andersen at the height of its success, Toffler reveals "the making of an Android," the peculiar process of employee indoctrination into the Andersen culture; how Androids—both accountants and consultants--lived the mantra "keep the client happy"; and how internal infighting and "billing your brains out" rather than quality work became the all-important goals. Toffler was in a position to know when something was wrong. In her earlier role as ethics consultant, she worked with over 60 major companies and was an internationally renowned expert at spotting and correcting ethical lapses. Toffler traces the roots of Andersen's ethical missteps, and shows the gradual decay of a once-proud culture. Uniquely qualified to discuss the personalities and principles behind one of the greatest shake-ups in United States history, Toffler delivers a chilling report with important ramifications for CEOs and individual investors alike.
Book Synopsis How Do Auditors Behave During Periods of Market Euphoria? The Case of Internet IPOs by : Andrew J. Leone
Download or read book How Do Auditors Behave During Periods of Market Euphoria? The Case of Internet IPOs written by Andrew J. Leone and published by . This book was released on 2014 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: How do auditors behave during periods of market euphoria? To address this question, we study auditor going-concern opinions around the time of the wave of stressed Internet companies filing to go public on Nasdaq, a period many characterize as the 'dot com bubble'. We focus on the day the auditor signs the opinion that appears in a stressed, Internet registrants' IPO filing and document a sharp increase in the number of opinions with dates between January 1999 and April 2000. Contemporaneous with this jump in transaction volume, and for the duration of these 16-months, Big 5 firms were less likely to render going-concern opinions to their stressed, Internet IPO registrant clients. Upon conducting tests for determinants that could lead auditors to shift their decision criteria during this euphoric audit market, we find the presence of a going-concern opinion varies with variables that proxy for client reasons (financial distress, company age, venture backing, IPO cash burn) and for less auditor independence/skepticism (recent fees for clients without venture backing and a rush-to-market for clients with venture backing) by the Big 5 firms. These findings suggest a mixed conclusion regarding the Big 5's behavior; as the presence of a going-concern opinion varies inversely with variables that proxy for both client viability and auditor self interest. As for consequences to investors, our analysis of two, three and four-year post-IPO stock delisting provides some evidence of a decrease in the predictive content (early-warning value) of Big 5 opinions signed during the Internet IPO bubble.
