Auditing The Auditors And Stock Crashes
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Author | : Qingyuan Li |
Publisher | : |
Total Pages | : 60 |
Release | : 2019 |
Genre | : |
ISBN | : |
Download Auditing the Auditors and Stock Crashes Book in PDF, Epub and Kindle
We investigate the impact of the initiations of national audit inspection programs on firm-specific stock crash risk in 38 countries worldwide. The staggered commencement of the inspection regimes in different countries allows us to identify the causal effect of audit quality on crash risk. We find a significant decrease (32.39%) in a firm's crash risk subsequent to the initiations of audit inspections. This negative effect is stronger for auditors with smaller size, limited industry expertise, and longer tenure. We further explore the mechanisms through which audit inspections affect crash risk. We find that the effect of inspection programs on crash risk is driven by client firms facing higher ex ante inspection risk, as well as client firms in which auditors play an important role in monitoring managers.
Author | : Kim Ittonen |
Publisher | : University of Vaasa |
Total Pages | : 211 |
Release | : 2009 |
Genre | : Auditing |
ISBN | : 9524762560 |
Download Audit Reports and Stock Markets Book in PDF, Epub and Kindle
Tiivistelmä: Tilintarkastuskertomukset ja osakemarkkinat.
Author | : Ashok Robin |
Publisher | : |
Total Pages | : 43 |
Release | : 2014 |
Genre | : |
ISBN | : |
Download Do Industry-Specialist Auditors Influence Stock Price Crash Risk? Book in PDF, Epub and Kindle
Francis (2011) calls for more research on “the effect of audit quality on economic outcomes.” We respond by examining whether high-quality auditors reduce stock price crash risk, an important consideration for stock investors. We argue that high-quality auditors reduce crash risk because of their information intermediary and corporate governance roles. Using a large sample of U.S. stocks spanning the period 1990-2009, we examine the issue empirically by using auditor industry specialization as our proxy for auditor quality. Our main finding is a statistically significant and negative association between auditor industry specialization and stock price crash risk, implying that high-quality auditors can directly benefit investors by reducing tail risk. In addition, we provide evidence that industry-specialist auditors moderate the effects of opacity, accounting conservatism, and tax avoidance on crash risk. Finally, our main finding of a negative relation between auditor industry specialization and crash risk is robust to using city-level industry specialization as an alternate measure.
Author | : Ahsan Habib |
Publisher | : |
Total Pages | : |
Release | : 2017 |
Genre | : |
ISBN | : |
Download Audit Partner Specialization and Future Stock Price Crash Risk Book in PDF, Epub and Kindle
We investigate the association between audit partner industry specialization and future stock price crash risk. Although research on audit partners has been growing, we are not aware of any prior studies that investigate partner-level specialization and crash risk. Using a large sample of Chinese stocks spanning the period 2000-2015, we find a statistically significant and negative association between auditor industry specialization and stock price crash risk. The result is consistent with the proposition that high quality auditors constrain bad news hoarding by managers. We further document that the negative association is more pronounced for firms who switch from non-specialist audit partners to specialist audit partners. We also find some evidence that audit partners' personal characteristics moderate the association between partner specialization and crash risk. Our results remain robust to alternative measures of partner specialization and to controls for endogeneity.
Author | : Ahsan Habib |
Publisher | : |
Total Pages | : |
Release | : 2016 |
Genre | : |
ISBN | : |
Download Auditor-Provided Tax Services and Stock Price Crash Risk Book in PDF, Epub and Kindle
This paper examines whether auditor-provided tax services affect stock price crash risk: an important consideration for stock investors. Provision of tax services by incumbent auditors could accentuate or attenuate crash risk depending on whether such services give rise to knowledge spillover or impair auditor independence. The study investigates two channels through which tax services might affect crash risk: earnings management in tax expenses, and tax avoidance. Also examined, is whether the association between tax services and crash risk is moderated by the particular business strategy that organizations pursue. A two-stage model is used to control for the potential endogeneity inherent in the selection of auditors for tax services. Empirical findings reveal that auditor-provided tax services attenuate crash risk by constraining both earnings management in tax expenses and tax avoidance. Further evidence shows that auditor-provided tax services reduce crash risk for firms following innovator business strategies. Taken together, empirical findings reported in this study support knowledge spillover benefits, i.e. insights gained from tax services can enhance audit effectiveness.
Author | : Hua Feng |
Publisher | : |
Total Pages | : 55 |
Release | : 2017 |
Genre | : |
ISBN | : |
Download Engagement Auditor Industry Specialization and Stock Price Crash Risk Book in PDF, Epub and Kindle
We investigate the effects of engagement auditor industry specialization on stock price crash risk. Although research on audit partners has been growing, we are not aware of any prior studies that investigate partner-level specialization and crash risk. Using a large sample of Chinese stocks spanning the period 2003-2015, we find a statistically significant and negative association between auditor industry specialization and stock price crash risk. Our mediation tests suggest that audit partner industry specialization decreases the risk of price crash by mitigating earnings manipulation. We further document that the negative association is more pronounced for firms that switch from non-specialist audit partners to specialist audit partners. We also find some evidence that audit partners' personal characteristics moderate the association between partner specialization and crash risk. Our results remain robust to alternative measures of partner specialization.
Author | : Ahsan Habib |
Publisher | : |
Total Pages | : 38 |
Release | : 2017 |
Genre | : |
ISBN | : |
Download Abnormally Long Audit Report Lag and Future Stock Price Crash Risk Book in PDF, Epub and Kindle
This paper examines the association between abnormally long audit report lag and future stock price crash. Audit report lag is defined as the period between a company's fiscal year end and the audit report date, and is informative about audit efficiency. Although a substantial body of literature investigates the determinants of audit report lag, scant empirical evidence exists on the consequences of audit report lag. Using data from Chinese listed companies we find evidence that abnormally long audit report lag increases the risk of a future stock price crash. We further document that this adverse consequence is more pronounced for firms with a poor internal control environment. Our research contributes to the literature on audit report lag, stock price crash risk and the effectiveness of internal control.
Author | : Mohammed Fida Abdul-Moatee Bahjatt |
Publisher | : |
Total Pages | : 388 |
Release | : 1982 |
Genre | : Auditing |
ISBN | : |
Download Stock Market Reaction to Audit Opinions Containing Reference to Other Auditors Book in PDF, Epub and Kindle
Author | : Jeffrey L. Callen |
Publisher | : |
Total Pages | : |
Release | : 2016 |
Genre | : |
ISBN | : |
Download Crash Risk and the Auditor-Client Relationship Book in PDF, Epub and Kindle
This study examines whether the term of the auditor-client relationship (i.e., auditor tenure) is associated with future stock price crash risk measured both ex ante and ex post. Using a large sample of U.S. public firms with Big Four auditors, we find robust evidence that auditor tenure is negatively related to one-year-ahead stock price crash risk. The evidence is consistent with monitoring-by-learning where development of client-specific knowledge over the term of the auditor-client relationship enhances auditors' ability to detect and deter bad news hoarding activities by clients, thereby reducing future crash risk. This result holds even after controlling for endogeneity of the tenure/crash risk relation. We further provide evidence indicating that option market investors do not fully incorporate the information contained in the term of auditor-client relationship in predicting future stock price crash risk. Our empirical results have important policy implications for regulators concerned with ensuring auditor independence.
Author | : Nancy Rueyhwa Mangold |
Publisher | : |
Total Pages | : 184 |
Release | : 1988 |
Genre | : Business & Economics |
ISBN | : |
Download Changing Auditors and the Effect on Earnings, Auditors' Opinions, and Stock Prices Book in PDF, Epub and Kindle