Auditor Responses to Shareholder Activism

In this paper, we investigate how auditors respond to shareholder activism against their clients. Our study is important because activism may be viewed by auditors as a source of increased engagement risk, thereby impacting audit outcomes. The potential relationship between shareholder activism and audit outcomes leads us to predict that activism targets will pay higher audit fees and also will be more likely to receive adverse internal control opinions (ICOs) and first‐time going concern opinions (GCOs). Our results, which support all three predictions, suggest that the public scrutiny associated with activism campaigns heightens auditors' concerns about reputational damage and litigation risk. Consistent with this notion, we find that activism targets are more likely to experience accounting‐related lawsuits. We also find that the increased likelihood of adverse ICOs documented in our baseline tests reflects higher‐quality reporting rather than increased auditor conservatism. Overall, our findings suggest that activism campaigns spur auditor diligence while also increasing the possibility of negative outcomes that may not be fully anticipated by activist investors.     

Clustering and compatibility between tourism attractions

Cumulative attraction or compatibility is a powerful factor in locational decisions of retail outlets, but it has received little attention in the tourism literature. Existing studies largely ignore the impact of spatial and thematic clustering on compatibility between tourism businesses. This research questions whether and how spatial and thematic clustering are related to tourist movements between visitor attractions. The study in Cornwall, England, is based on in‐depth interviews with tourist attraction managers and key informants, complemented by a survey of 435 tourists. It provides insights into the relationship between the nature of the tourism product, spatial clustering and tourism behaviour. Copyright © 2009 John Wiley & Sons, Ltd.