The credibility of self-regulation: Evidence from the accounting profession's peer review program |
| |
Authors: | Gilles Hilary Clive Lennox |
| |
Institution: | aDepartment of Accounting, Hong Kong University of Science & Technology, Clear Water Bay, Kowloon, Hong Kong |
| |
Abstract: | Following the Sarbanes–Oxley Act, self-regulated peer reviews at accounting firms were replaced by independent inspections conducted by the Public Company Accounting and Oversight Board. Critics of self-regulation had argued that the peer review program lacked credibility. This paper tests whether the opinions issued by the peer reviewers provided credible information to clients about audit firm quality. We find audit firms gained clients after receiving clean opinions from their reviewers and lost clients after receiving modified or adverse opinions. This suggests peer review opinions provided credible information about quality differences between audit firms. |
| |
Keywords: | Self-regulation Sarbanes– Oxley act |
本文献已被 ScienceDirect 等数据库收录! |