What If Auditing Was Not 'Low-Margin Business'? Auditors and Their IPO Clients as a Natural Experiment PDF Download
Are you looking for read ebook online? Search for your book and save it on your Kindle device, PC, phones or tablets. Download What If Auditing Was Not 'Low-Margin Business'? Auditors and Their IPO Clients as a Natural Experiment PDF full book. Access full book title What If Auditing Was Not 'Low-Margin Business'? Auditors and Their IPO Clients as a Natural Experiment by Ramgopal Venkataraman. Download full books in PDF and EPUB format.
Author: Ramgopal Venkataraman
Publisher:
ISBN:
Category :
Languages : en
Pages : 36
Get Book Here
Book Description
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.
Author: Ramgopal Venkataraman
Publisher:
ISBN:
Category :
Languages : en
Pages : 36
Get Book Here
Book Description
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.
Author: Agnieszka Bem
Publisher: Springer
ISBN: 3319922289
Category : Business & Economics
Languages : en
Pages : 283
Get Book Here
Book Description
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.
Author: Peter Ising
Publisher: Springer Science & Business Media
ISBN: 3658037946
Category : Business & Economics
Languages : en
Pages : 242
Get Book Here
Book Description
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.
Author: Daniel Aobdia
Publisher:
ISBN:
Category :
Languages : en
Pages : 100
Get Book Here
Book Description
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.
Author: Nargiz Abdullayeva
Publisher:
ISBN:
Category : Actions and defenses
Languages : en
Pages : 63
Get Book Here
Book Description
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.
Author: Marshall A. Geiger
Publisher: Routledge
ISBN: 1000392031
Category : Business & Economics
Languages : en
Pages : 160
Get Book Here
Book Description
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.
Author: Christiane Strohm
Publisher: Springer Science & Business Media
ISBN: 3835091158
Category : Business & Economics
Languages : en
Pages : 247
Get Book Here
Book Description
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.
Author: Zhifeng Yang
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
Get Book Here
Book Description
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: 1948306336
Category :
Languages : en
Pages : 128
Get Book Here
Book Description
Author:
Publisher:
ISBN:
Category :
Languages : en
Pages :
Get Book Here
Book Description
