The Emergence of Second‐Tier Auditors in the US: Evidence from Investor Perceptions of Financial Reporting Credibility

We examine changes in the association between auditor type (Big 4, Second‐Tier, and Other non‐Big 4) and perceived financial reporting credibility in the wake of events (e.g., Andersen's failure, the implementation of SOX, creation of the PCAOB, etc.) which led to significant growth in Second‐Tier client portfolios and increased scrutiny of Second‐Tier audit practices. Our results reveal that financial reporting credibility of Second‐Tier clients was lower than that of Big 4 clients and was indistinguishable from that of Other non‐Big 4 clients pre‐Andersen. However, post‐Andersen, we find that financial reporting credibility of Second‐Tier clients is higher than that of Other non‐Big 4 clients and is indistinguishable from that of Big 4 clients. We expect that our results will be of interest to regulators, both in the United States and in the European Union, who have expressed concerns about the current state of competition in the audit market, management and boards of directors that are contemplating switching to a Second‐Tier audit firm, and academics investigating quality differences among audit firm types.     

Organization size, budget cycle, and budget related influence in city governments: An empirical study

This paper explores the relationship between budgeting and perceived power in city government organizations. Data are reported from a survey of perceived budget influence in six city governments in Texas. The findings suggest that perceived influence varies by stage of budget cycle, city size, level of hierarchy, department function, and vertical vs horizontal direction of influence. For example, during budget formulation city managers were perceived as having the most vertical power. During budget implemetation, there was a perceived increase in department head vertical power and a decrease in city council power. Perceptions of horizontal power suggested that budget departments generally had greater perceived influence than operating departments for budget formulation, but not for budget implementation. The findings are used to develop a strategic contingencies model of budget-related power, and to suggest some research steps for testing the proposed model.     

Artificial Intelligence and Declined Guilt: Retailing Morality Comparison Between Human and AI

Journal of Business Ethics - Several technological developments, such as self-service technologies and artificial intelligence (AI), are disrupting the retailing industry by changing consumption...     

Measuring audit quality of local governments in England and Wales

The purpose of this paper is to model and test the audit quality provided to local governments in England and Wales. A key question is: are there major differences in audit quality provided? The Audit Commission, a national public body under Parliament, regulates the audits. It sets audit standards, appoints the auditors, and (although each auditor and client local government set the specific audit fee for that client) it establishes a formula to determine standard audit fees. The Audit Commission also conducts an annual review of the audit quality provided by the selected auditors, as well as a survey of client satisfaction. The majority of audits are conducted by District Auditors (public sector employees of the Audit Commission). About a quarter of local governments are audited by one of six private sector auditors (including three of the Big 4). Actual results indicate that audit quality differences are associated with the number of governmental audit clients and local government type. Generally, there were modest quality differences by auditor category.     

‘It Was Such a Handy Term’: Management Fashions and Pragmatic Ambiguity*

abstract This article builds on constructs that authors have labelled strategic ambiguity, interpretative viability, umbrella constructs, and boundary objects, and suggests that these constructs all articulate a central concern for collective action and the role of ambiguity therein. It characterizes as pragmatic ambiguity the condition of admitting more than one course of action, and elucidates and operationalizes this new construct. Drawing on the sociology of translation ( Callon, 1986 ; Latour, 1987 ), ^[1] it argues that pragmatic ambiguity is both the result and the resource of a collective process of intéressement occurring during the rise in popularity of a new management approach. Following Benders and van Veen (2001 ), the article posits that pragmatic ambiguity increases during the rise of a management fashion. It provides empirical evidence in support of this claim by means of a longitudinal analysis of quality management (QM) concepts as articulated by several authors both before and during the Quality Movement of the 1980s and 1990s. The analyses of QM texts show that concepts became vaguer, more ambiguous, and more general as the Quality Movement gained momentum, suggesting the presence of a positive feedback loop between pragmatic ambiguity and popularity. In addition, the data illustrate how pragmatic ambiguity was achieved and sustained textually, and how it was supported by a variety of social, linguistic and rhetorical factors.     

Accounting information and municipal bond net interest cost: An empirical evaluation

The objective of this study was to test the association between the surplus/deficit of selected Minnesota municipalities and the net interest cost of the general obligation bonds issued by these municipalities. This objective was accomplished by employing a pooled time-series design.A two-way analysis of variance was used to determine if there was a significant difference in the effect of net interest cost between positive and negative forecast errors. The ANOVA results of both tests indicate that the surplus/deficit is not correlated with increases/ decreases in the net interest cost of the bonds issued by a municipality. The results were unaffected by the exclusion of bond ratings as an independent variable.