Can Audit Reforms Affect the Information Role of Audits? Evidence from the German Market

• 成果类型: Article
• 署名作者: Gassen, Joachim; Skaife, Hollis A.
• 署名单位: Humboldt University of Berlin; University of Wisconsin System; University of Wisconsin Madison
• 刊物名称: CONTEMPORARY ACCOUNTING RESEARCH
• ISSN/ISSBN: 0823-9150
• DOI: 10.1506/car.26.3.10
• 发表日期: 2009
• 页码: 867-+
• 关键词: uncertainty; reputation; matter; RISK

摘要

We investigate whether audit reforms affect the information role of audits in a country where the audit traditionally serves a statutory reporting function. Specifically, we investigate the audit market effects of audit reforms mandated by the German government in the Act on Control and Transparency of Enterprises (the Act). We test for differences in the types of audit reports issued, the information content of first-time going-concern audit opinions, and the demand for dominant audit suppliers before and after the implementation of the Act to draw inferences on whether the audit reforms enhanced the information role of German audits. We find an increase in the frequency of modified audit opinions after the audit objective changed from verifying assets in place to identifying and reporting concern uncertainties and noncompliant financial reporting practices. We also find an increase in the information content of first-time going-concern audit reports issued after the audit reforms were implemented. In addition, the results also indicate an increase in the demand for dominant audit suppliers in the postreform years. Moreover, we document a significant increase in the number of auditor lawsuits after the audit reforms went into effect. Collectively, our results suggest that audit reforms improved the information role of German audits and that German firms responded to the improvement in audit reporting by increasing their demand for dominant audit suppliers.