This study examines the association between auditor-provided tax services (APTS) and financial reporting quality to determine if APTS impairs auditor independence or generates knowledge spillover. Lower (higher) financial reporting quality is generally viewed as evidence supporting auditor independence impairment (knowledge spillover). We use the quality of the income tax accrual estimate from ...

ACKNOWLEDGMENTS We would like to thank Daniel O'Leary (editor), Bob Berry (former editor) for the encouragement and three anonymous referees for their helpful comments. Summary Auditor appointment can be regarded as a matter of pursued audit quality and is driven by several factors. The adoption of an effective auditor procurement process increases the likelihood that a company will engage the ...

We investigate the effectiveness of proportionate liability in reducing the probability of fraud and audit risk relative to joint and several liability in two strategic audit settings: one that provides conclusive evidence of fraud and one that provides inconclusive evidence of fraud. In both settings the auditor makes an audit effort choice, but in the second setting the auditor also evaluates...

In May 2005, the “Report of the Auditor General on Seniors Care and Programs” (“the Report”) was released.1 The Auditor General examined services provided to seniors in long-term care facilities, the Seniors Lodge Program and the Alberta Seniors Benefit Program.2 In total, the systems of nine Regional Health Authorities (RHAs), 25 long-term care facilities, and 20 lodge operators were examined....

This study investigates the effect of audit firm tenure on earnings management risk. We perform multivariate regression analyses to examine the empirical relationship between auditor tenure and the probability of earnings manipulation using Beneish’s (1999) framework. The analysis covering a five year time-period surrounding the enactment of SOX produces evidence of a negative relationship betw...

In-group bias, a product of Social Identity Theory, may impair auditor independence by influencing auditor judgments in an analytical review task. Auditors rely on client representations to support their opinion of the financial statements; however, clients are sometimes former auditors of the external audit firm. This prior relationship could lead the auditor to exhibit unwarranted trust of cl...

In this paper, we apply the multinomial logit regression and decision tree approaches to examine the critical deciding factors that affect auditor choice decisions. We first examine the relationship between the auditor choice and firm specific factors. In order to get deeper insights about the association between auditor choice and firm’s characteristics, this paper employs the decision tree ap...

This study examines relation of the auditor choice and cost of debt financing for private SMEs (small and medium sized enterprises). In particular, it examines whether choice of a certified auditor or reputable international audit firm provides economic value to private SMEs as a factor lowering firms' information problems and cost of debt financing in the capital markets. Using time-series cro...