Who Did the Audit? Audit Quality and Disclosures of Other Audit Participants in PCAOB Filings

• 成果类型: Article
• 署名作者: Dee, Carol Callaway; Lulseged, Ayalew; Zhang, Tianming
• 署名单位: University of Colorado System; University of Colorado Denver; University of Colorado Anschutz Medical Campus; Children's Hospital Colorado; University of North Carolina; University of North Carolina Greensboro; State University System of Florida; Florida State University
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-50968
• 发表日期: 2015
• 页码: 1939-1967
• 关键词: earnings management; FIRMS; INDEPENDENCE; INFORMATION; valuation; accruals; IMPACT

摘要

We empirically test whether audit quality is affected when part of an SEC issuer's audit is outsourced to auditors other than the principal auditor (participating auditors''). We find a significantly negative market reaction and a significant decline in earnings response coefficients (ERCs) for experimental issuers disclosed for the first time as having participating auditors involved in their audits. However, we find no market reaction and no decline in ERCs for a matching sample of issuers that are not disclosed as using participating auditors, nor for issuers disclosed for the second or third time as using participating auditors. We also find actual audit quality as measured by absolute value of performance-matched discretionary accruals is lower for the experimental issuers, although we find no difference in audit fees paid by the experimental and matching issuers in a multivariate model. Our findings suggest that the PCAOB's proposed rule requiring disclosure of the use of other auditors in addition to the principal auditor would provide information useful to investors in assessing audit quality for SEC issuers.