Journal ArticleDOI
Abnormal Audit Fee and Audit Quality
Sharad Asthana,Jeff P. Boone +1 more
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In this paper, the authors test the hypotheses that below-normal audit fees signal important nuances in the balance of bargaining power between the auditor and the client, and that such power may ultimately influence audit quality.Abstract:
SUMMARY: This study tests the hypotheses that below-normal audit fees signal important nuances in the balance of bargaining power between the auditor and the client, and that such power may ultimately influence audit quality. We find that audit quality, proxied by absolute discretionary accruals and meeting or beating analysts' earnings forecasts, declines as negative abnormal audit fees increase in magnitude, with the effect amplified as proxies for client bargaining power increase. We find that this effect is dampened in years following the Sarbanes-Oxley Act (SOX), suggesting that SOX was effective in enhancing auditor independence.read more
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Regression Diagnostics: Identifying Influential Data and Sources of Collinearity
TL;DR: This chapter discusses Detecting Influential Observations and Outliers, a method for assessing Collinearity, and its applications in medicine and science.
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Estimation and Inference in Econometrics
TL;DR: A theme of the text is the use of artificial regressions for estimation, reference, and specification testing of nonlinear models, including diagnostic tests for parameter constancy, serial correlation, heteroscedasticity, and other types of mis-specification.
Journal ArticleDOI
Do Big 4 Auditors Provide Higher Audit Quality after Controlling for the Endogenous Choice of Auditor
John Daniel Eshleman,Peng Guo +1 more
TL;DR: In this paper, the authors re-examine this issue using the incidence of accounting restatements as a measure of audit quality, using a propensity-score matching procedure similar to that used by recent research to control for clients' endogenous choice of auditor.
Journal ArticleDOI
Auditor Independence and Audit Quality: A Literature Review
Nopmanee Tepalagul,Ling Lin +1 more
TL;DR: In this article, the authors present a comprehensive review of academic research pertaining to auditor independence and audit quality and discuss findings related to the incentives, perceptions, and behaviors of the auditor and the client, as well as the effects of each threat on the actual and perceived quality of audits and financial reports.
Journal ArticleDOI
Who's Really in Charge? Audit Committee versus CFO Power and Audit Fees
Matthew Beck,Elaine G. Mauldin +1 more
TL;DR: Although regulation makes audit committees responsible for determining and negotiating audit fees, researchers and practitioners express concerns that CFOs continue to control these negoti... as discussed by the authors, however, they do not have the authority to determine and negotiate audit fees.
References
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Journal ArticleDOI
Estimating Standard Errors in Finance Panel Data Sets: Comparing Approaches
TL;DR: In this article, the authors examine the different methods used in the literature and explain when the different approaches yield the same (and correct) standard errors and when they diverge, and give researchers guidance for their use.
Journal ArticleDOI
Earnings Management During Import Relief Investigations
TL;DR: In this article, the authors test whether firms that would benefit from import relief attempt to decrease earnings through earnings management during import relief investigations by the United States International Trade Commission (ITC).
Book
Regression Diagnostics: Identifying Influential Data and Sources of Collinearity
TL;DR: In this article, the authors present a method for detecting and assessing Collinearity of observations and outliers in the context of extensions to the Wikipedia corpus, based on the concept of Influential Observations.
Posted Content
Detecting Earnings Management
TL;DR: In this paper, the authors evaluate alternative models for detecting earnings management by comparing the specification and power of commonly used test statistics across the measures of discretionary accruals generated by each model.
Journal ArticleDOI
Auditor size and audit quality
TL;DR: In this paper, the authors argue that audit quality is not independent of audit firm size, even when auditors initially possess identical technological capabilities, and when incumbent auditors earn client-specific quasi-rents, auditors with a greater number of clients have more to lose by failing to report a discovered breach in a particular client's records.