The Effects of Multitasking on Auditors’ Judgment Quality

Auditors must frequently multitask in order to complete their work efficiently. However, the potential impact of multitasking on auditors’ judgment quality is poorly understood. Using Ego Depletion Theory and a laboratory experiment, we predict and find that auditors become less able to identify seeded errors after multitasking, and that this effect is most prominent in the identification of conceptual, rather than mechanical, errors. These negative consequences of multitasking are mitigated when auditors are exposed to an intervention based on a theoretical countermeasure of replenishing depleted self‐control resources, in that multitasking auditors identify more seeded errors with the intervention than without. Given that multitasking is a pervasive feature of the current audit environment, these findings have direct implications for audit practice. Beyond identifying multitasking as a cause of impaired performance in auditing, this study's results provide initial evidence that such negative effects can be mitigated, resulting in improved audit quality and, by extension, improved financial statement quality.     

The Effect of Joint Auditor Pair Composition on Audit Quality: Evidence from Impairment Tests

Using a sample of firms from France, where the law requires the use of two auditors, we study the effect of auditor pair composition on audit quality by examining a specific account, goodwill impairment. We document that firms audited by a Big 4–non‐Big 4 auditor pair (BS) are more likely to book an impairment and book a larger impairment than firms audited by a Big 4–Big 4 auditor pair (BB) when low‐performance indicators suggest a greater likelihood of impairment. Moreover, firms audited by a BB pair reduce impairment disclosures when they book impairments, while firms audited by a BS pair do not, suggesting lower transparency for firms audited by a BB pair. Our results inform investors and firms in mandatory joint audit regimes, as well as regulators who are considering requiring joint audits.     

Creditors’ and Shareholders’ Reporting Demands in Public Versus Private Firms: Evidence from Europe*

In this study we investigate whether the importance of accounting information in contracting and communication with shareholders and creditors affects earnings timeliness in publicly disclosed general‐purpose financial statements. To operationalize the relationship between timeliness demands and the importance of accounting information to shareholders and creditors, we compare the (asymmetry in) earnings timeliness of public firms with that of private firms. We attribute public versus private firm differences in timeliness to shareholders’ demands when a country’s institutions provide strong investor protection. Similarly, we attribute these differences to creditors’ demands when the institutions provide strong creditor protection. Our analysis of public and private firms in 13 Western European countries suggests that creditors and shareholders have different timeliness demands. In particular, we find that the public versus private firm difference in asymmetric timeliness is not associated with a country’s degree of investor protection but positively associated with a country’s degree of creditor protection. The results further suggest that shareholders demand symmetric rather than asymmetric timeliness. An important implication of our study is that general‐purpose financial statements are responsive to creditors’ reporting demands, which contrasts with the idea that these — primarily private — creditors would use special‐purpose reports.     

转型经济环境下的民营上市公司股权结构与审计质量需求的实证分析

股权结构是公司治理结构的重要组成部分,国内学者对股权结构与审计质量需求之间的关系进行了大量研究.近年来,民营经济迅速发展,在国民经济中的地位越来越重要,民营上市公司作为民营企业中的优秀代表,其作用不可小觑.研究民营上市公司股权结构与审计质量需求之间的关系具有重要的理论和现实意义.     

Auditors’ Response to Assessments of High Control Risk: Further Insights

Auditing standards prescribe a risk‐based approach where auditors assess the risk of material misstatement and then design and perform audit procedures to reduce audit risk to an appropriately low level. Prior research suggests that auditors are responsive to high control‐risk assessment (CRA), but that this response is, perhaps, only partially effective at reducing audit risk, with relatively little insight into where and why this occurs. By refining analyses to more detailed levels of the audit, I extend this research by providing further insight into auditors’ response to high CRA. I examine and find that audit fees are significantly higher for high CRA in revenue relative to high CRA in other accounts, suggesting that auditor effort in response to high CRA is more pronounced in audit areas of particular interest and concern to investors and regulators. Despite this, I find evidence suggesting that revenue is the only audit area examined where auditor effort in response to high CRA does not attenuate the likelihood of misstatement. Finally, because auditors face time constraints, I examine whether increased effort in response to high CRA in certain audit areas diverts auditors’ attention from other areas with lower risk, thus contributing to the overall association between misstatements and internal control deficiencies documented in prior research. I find a greater likelihood of misstatement in non‐core operating accounts with lower CRA as audit effort increases in response to high CRA in revenue, consistent with the explanation that high CRA in revenue may divert auditors’ attention from other areas of the audit with lower CRA.     

大股东股权制衡的公司治理效应——来自民营上市公司的证据

目前关于股权制衡的研究重点关注股权制衡对公司业绩的影响,而对其作用机制及路径并未引起足够重视,同时也忽视了关系大股东产生的负面影响。利用我国民营上市公司数据,实证分析了股权制衡的治理效应与作用路径,并进一步分析大股东持股水平、大股东关系对股权制衡治理机制的影响。研究结果表明,股权制衡既提高了公司投资效率,也抑制了大股东掏空,因此促进了公司经营业绩。对于大股东控制程度较低的公司,股权制衡削弱了投资无效率与掏空导致的不利影响,但对于大股东控制力较强的公司,股权制衡的治理机制并未显著发挥作用。如果公司存在关系大股东,大股东可能采取一致行动实施掏空行为。关系大股东的存在导致股权制衡也难以发挥投资效率促进和掏空抑制的治理作用。     

Understanding Audit Quality: Insights from Audit Professionals and Investors

Projects seeking to define, measure, and evaluate audit quality are on the agendas of auditing standards setters as well as audit firms. The Public Company Accounting Oversight Board (PCAOB) currently provides information regarding audit quality through the release of inspection reports, and the Board intends to establish and report audit quality indicators. To provide additional perspective on audit quality, we obtain auditors' and investors' views, definitions, and indicators of audit quality. We find that investors' definitions of audit quality focus more on inputs to the audit process than do auditors', and that investors view the number of PCAOB deficiencies as an indicator of overall firm quality. We find a consensus that auditor characteristics may be the most important determinants of audit quality, and that restatements may be the most readily available signal of low audit quality. We relate responses to a general audit quality framework, provide support for archival audit research, and identify additional disclosures that participants suggest could signal audit quality. Taken together, we provide evidence regarding the construct of audit quality in the post‐SOX environment, evaluate many of the audit quality indicators proposed by the PCAOB, and suggest avenues for future research.     

流动性与地理因素：基于中国上市公司的实证研究

针对地理因素研究了我国股市的流动性特征.首先按GDP排名把31个省市划分成经济发展程度有差异的两类,在此基础上构建虚拟变量代表地理因素,分别把交易量、换手率和流动性度量指标作为被解释变量,研究上市公司股票流动性和地理因素之间相关性的存在性以及其显著程度.研究结果表明地理因素对交易量没有影响,对换手率和流动性有一定的影响,"发展中"省市公司在流动性方面相对于"发达"省市公司表现出明显的差异.     

Audit Hours and Unit Audit Price of Industry Specialist Auditors: Evidence from Korea

Higher audit fees associated with auditor industry specialization could represent higher unit price charged by industry specialist auditors (ISAs) or the provision of a greater quantity of audit services. This study exploits a field setting in Korea, where the disclosure of audit hours is required in company annual reports, and finds that ISAs charge significantly higher total audit fees but also expend significantly greater audit hours than non‐ISAs. When audit fees and hours are considered together, the unit audit price of ISAs is significantly lower than that of non‐ISAs. This indicates that higher total audit fees associated with ISAs are likely to be attributable to greater audit hours associated with ISAs. However, greater audit hours for ISAs may suggest higher audit quality or may simply indicate that the additional audit work performed by ISAs is conducted by relatively cheaper junior auditors. Our work provides an alternative explanation for the higher total audit fees documented in the previous studies.     

Union and Debt: Evidence from Chinese Private Firms

Do unions really matter in China? Using a dataset containing more than 110 thousand Chinese private manufacturing firms, this paper is the first attempt to examine how unions' bargaining power affects firms' capital structures. We find that: (1) the firms' debt levels are often positively associated with their unions' bargaining powers; (2) when a firm is in financial distress, the management is more likely to issue more debt to strengthen its bargaining power against the union and increase its residual income; (3) compared with long-term debt, short-term debt is a better option for the management to increase its bargaining power and residual income. Our research indicates that the unions of private Chinese firms are an important policy instrument for the management rather than useless decorations, which provides valuable insights for us to understand the employee–employer relations and firms' capital structures in emerging economies.