Managerial Auditing Journal最新文献

{"title":"The governance role of R&D specialist auditors: Evidence from discretionary R&D expenditure","authors":"Eugenia Y. Lee, Wonsuk Ha","doi":"10.1108/maj-05-2022-3564","DOIUrl":"https://doi.org/10.1108/maj-05-2022-3564","url":null,"abstract":"<h3>Purpose</h3>\u0000<p>This study aims to examine whether auditors who specialize in research and development (R&amp;D) activities help reduce managers’ opportunistic adjustment of R&amp;D expenditure for real earnings management (REM).</p><!--/ Abstract__block -->\u0000<h3>Design/methodology/approach</h3>\u0000<p>Using a sample of US firms during the 2001–2017 period, the authors identify auditors’ R&amp;D specialization as their prior experience of auditing R&amp;D expenses spent by each client’s peers. The authors measure R&amp;D-based REM as the negative deviation from the predicted level of R&amp;D expenditure.</p><!--/ Abstract__block -->\u0000<h3>Findings</h3>\u0000<p>The authors find that clients of R&amp;D specialist auditors are less likely to engage in REM through a discretionary reduction of R&amp;D expenditure. This effect is more pronounced when clients face higher competition, have larger investment opportunities and entail higher audit risks.</p><!--/ Abstract__block -->\u0000<h3>Practical implications</h3>\u0000<p>This study shows that auditors’ specialized knowledge can facilitate stronger monitoring of clients’ real decisions, providing implications for auditors’ knowledge acquisition and transfer in specific types of transactions.</p><!--/ Abstract__block -->\u0000<h3>Originality/value</h3>\u0000<p>This study contributes to the literature by documenting the governance role played by R&amp;D specialist auditors in clients’ real economic decisions. Moreover, the study identifies R&amp;D as a distinct area of auditor specialization.</p><!--/ Abstract__block -->","PeriodicalId":47823,"journal":{"name":"Managerial Auditing Journal","volume":null,"pages":null},"PeriodicalIF":2.9,"publicationDate":"2024-05-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140941204","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Does audit quality affect auditors’ career development? Evidence from Chinese audit firms’ demise","authors":"Hanwen Chen, Yang Feng, Aiju Kou, Siyi Liu","doi":"10.1108/maj-11-2023-4134","DOIUrl":"https://doi.org/10.1108/maj-11-2023-4134","url":null,"abstract":"\u0000Purpose\u0000This study aims to test the effect of individual audit quality on career advancement the audit labour market.\u0000\u0000\u0000Design/methodology/approach\u0000This paper uses data on auditors from two collapsed audit firms in China, namely, Ruihua and Zhengzhong Zhujiang, and tests the effect of individual audit quality on career advancement in the audit labour market.\u0000\u0000\u0000Findings\u0000The baseline results show that high-quality audits promote auditors’ career advancement. Our results hold after a battery of robustness tests. Further analyses support our hypothesis, indicating that client retention and audit fees are positively related to auditors’ prior audit quality. The effect of audit quality on career advancement does not hold for auditors from sanctioned branch offices or for auditors with prior culpable clients, as shared reputation damage can weaken the effect of high audit quality. Furthermore, this paper investigates whether the reputation enhancement effect of high audit quality can be strengthened by auditor experience, the title of “senior auditor” and IPO auditing experience. We also show that clients and audit firms place more weight on the quality of audits conducted by auditors in competitive markets and auditors with engagements matched with industries.\u0000\u0000\u0000Originality/value\u0000Together, these findings indicate the vital role of individual audit quality in auditors’ career development in the audit labour market, consistent with the reputation rationale for audit quality.\u0000","PeriodicalId":47823,"journal":{"name":"Managerial Auditing Journal","volume":null,"pages":null},"PeriodicalIF":2.9,"publicationDate":"2024-05-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141009955","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Auditor tenure and non-GAAP earnings","authors":"Pureum Kim, Myungsoo Son","doi":"10.1108/maj-05-2023-3928","DOIUrl":"https://doi.org/10.1108/maj-05-2023-3928","url":null,"abstract":"<h3>Purpose</h3>\u0000<p>This study aims to examine whether the newly available auditor tenure information is associated with non-GAAP earnings, as the recent requirement to disclose the initial year of auditor-client relationship in audit reports may give the impression that longer auditor tenure may be related to lower audit quality.</p><!--/ Abstract__block -->\u0000<h3>Design/methodology/approach</h3>\u0000<p>Using a sample of firm-quarters from 2017 to 2020, the authors conduct both univariate and regression analyses. We use hand-collected data for auditor tenure, SEC comment letters, and non-GAAP variables.</p><!--/ Abstract__block -->\u0000<h3>Findings</h3>\u0000<p>First, the authors find that the likelihood of disclosing non-GAAP earnings monotonically increases with auditor tenure on a univariate basis. Second, auditor tenure is negatively associated with aggressive non-GAAP reporting. Third, the authors document evidence of aggressive reporting in general; that is, items excluded in calculating non-GAAP earnings are associated with future performance. However, the association declines with longer auditor tenure. Finally, the authors report evidence that the likelihood of receiving an SEC comment letter that contains non-GAAP comments decreases with longer auditor tenure.</p><!--/ Abstract__block -->\u0000<h3>Practical implications</h3>\u0000<p>The results show that regulators need to consider both GAAP and non-GAAP disclosures’ costs and benefits when enacting auditor tenure regulation. Investors can benefit from the findings in evaluating the quality of non-GAAP earnings. The findings are also relevant to the SEC when allocating limited resources in monitoring non-GAAP reporting.</p><!--/ Abstract__block -->\u0000<h3>Originality/value</h3>\u0000<p>To the best of the authors’ knowledge, this is the first study showing that auditor tenure is associated with the quality of non-GAAP earnings. Given that financial reporting quality should be understood as a comprehensive system comprising both mandatory and voluntary disclosures, this study complements the literature that examines the effect of auditor tenure on financial reporting quality using GAAP reporting.</p><!--/ Abstract__block -->","PeriodicalId":47823,"journal":{"name":"Managerial Auditing Journal","volume":null,"pages":null},"PeriodicalIF":2.9,"publicationDate":"2024-04-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140580376","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"A value to voice? An examination of auditor upward feedback","authors":"Christine Gimbar, Gabriel Saucedo, Nicole Wright","doi":"10.1108/maj-01-2023-3802","DOIUrl":"https://doi.org/10.1108/maj-01-2023-3802","url":null,"abstract":"<h3>Purpose</h3>\u0000<p>In this paper, the authors examine auditor upward feedback, which provides a unique opportunity for staff auditors to exercise their voice within an audit firm. Upward feedback can improve employee perceptions of fairness and justice while mitigating feelings of burnout and turnover intentions, thus enhancing audit quality. However, it is unclear which circumstances improve the likelihood that auditors will use their voice and give feedback to superiors. The purpose of this study is to investigate contextual factors that impact the likelihood that auditors will provide upward feedback.</p><!--/ Abstract__block -->\u0000<h3>Design/methodology/approach</h3>\u0000<p>Using a 2 × 2 + 2 experiment with staff auditors, the authors test the likelihood of giving feedback when presented with different feedback systems (electronic anonymous, face-to-face or no opportunity) and experiences with managers (favorable or unfavorable).</p><!--/ Abstract__block -->\u0000<h3>Findings</h3>\u0000<p>The authors find that, while feedback type alone does not change the likelihood of auditors providing upward feedback, auditors are more likely to provide feedback after a favorable manager experience than an unfavorable one. The likelihood of providing feedback after an unfavorable experience is higher, however, when the feedback type is electronic and anonymous as opposed to face-to-face. Additional analyses illustrate strong relationships between manager experience, feedback type and procedural justice, which significantly influence the turnover intentions of staff auditors.</p><!--/ Abstract__block -->\u0000<h3>Originality/value</h3>\u0000<p>To the best of the authors’ knowledge, the authors are the first to examine the value of subordinates’ upward feedback on firm outcomes, including burnout and turnover intention.</p><!--/ Abstract__block -->","PeriodicalId":47823,"journal":{"name":"Managerial Auditing Journal","volume":null,"pages":null},"PeriodicalIF":2.9,"publicationDate":"2024-03-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140324368","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"The effect of gender diversity on the disclosure of key audit matters: examination of dual-signature environment","authors":"Li Jen He, Faradillah Amalia Rivai","doi":"10.1108/maj-09-2022-3695","DOIUrl":"https://doi.org/10.1108/maj-09-2022-3695","url":null,"abstract":"\u0000Purpose\u0000This paper aims to investigate the impact of gender diversity in the composition of engagement auditors on the disclosure of key audit matters (KAMs) in a dual-signature environment.\u0000\u0000\u0000Design/methodology/approach\u0000The authors used the unique institutional setup of Taiwan, where the law requires that audit reports be signed by two audit partners. The authors examined the effect of gender diversity composition among engagement auditors on KAM disclosure, considering behavioral differences between female and male auditors.\u0000\u0000\u0000Findings\u0000The empirical results indicate that gender diversity composition in the dual-signature environment is associated with the number of disclosed KAM items (KAMIT) and the length of the explanations for each KAMIT. Furthermore, the authors found that gender diversity composition, particularly when led by female audit partners, has a more pronounced impact on the explanation of each KAMIT rather than on the disclosure of KAMIT. The authors also noted that the moderating effect of audit firm specialization does not influence the gender diversity composition of audit partners in disclosing KAMs.\u0000\u0000\u0000Originality/value\u0000This study’s empirical findings demonstrate that the interaction between different gender compositions in a dual-signature environment influences KAM disclosure.\u0000","PeriodicalId":47823,"journal":{"name":"Managerial Auditing Journal","volume":null,"pages":null},"PeriodicalIF":2.9,"publicationDate":"2024-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140086241","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Do customers’ financial restatements affect how auditors respond to their suppliers? Evidence from China","authors":"Sujie Hu, Yuting Qian, Sumin Hu","doi":"10.1108/maj-04-2023-3906","DOIUrl":"https://doi.org/10.1108/maj-04-2023-3906","url":null,"abstract":"\u0000Purpose\u0000The purpose of this study is to explore the economic impact of financial restatements by major customers on the audit opinion of their suppliers, showing that non-financial information disclosure potentially helps auditors make better assessments.\u0000\u0000\u0000Design/methodology/approach\u0000Using a sample of China’s listed firms from 2007 to 2021, the authors aim to find the relationship between customers’ financial restatements and their suppliers’ audit opinions. Heckman selection model, placebo tests and other robustness checks are used as well.\u0000\u0000\u0000Findings\u0000The findings reveal that customers’ financial restatements have a significant effect on the likelihood of suppliers receiving modified audit opinions. This relationship is pronounced when suppliers face a higher level of financial constraints, exhibit poorer accounting conservatism or receive more negative media coverage. Additionally, this effect occurs through increased business risk and information risk, which heightens auditors’ perceived audit risk. Moreover, the study highlights the influence of switching costs, auditor expertise and restatement severity on this relationship.\u0000\u0000\u0000Practical implications\u0000Risks originating from customers can spread along the supply chain, emphasizing the necessity for auditors to give heightened attention to both the audited firms and their customer information. Moreover, regulators should carefully consider the important impact of customer information disclosures to maximize the protection of the interests of external information users.\u0000\u0000\u0000Originality/value\u0000This study not only confirms the crucial role of customer information disclosures in annual reports for stakeholders and auditors but also contributes to the existing literature on customer–supplier relationships.\u0000","PeriodicalId":47823,"journal":{"name":"Managerial Auditing Journal","volume":null,"pages":null},"PeriodicalIF":2.9,"publicationDate":"2024-02-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139774000","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Do customers’ financial restatements affect how auditors respond to their suppliers? Evidence from China","authors":"Sujie Hu, Yuting Qian, Sumin Hu","doi":"10.1108/maj-04-2023-3906","DOIUrl":"https://doi.org/10.1108/maj-04-2023-3906","url":null,"abstract":"\u0000Purpose\u0000The purpose of this study is to explore the economic impact of financial restatements by major customers on the audit opinion of their suppliers, showing that non-financial information disclosure potentially helps auditors make better assessments.\u0000\u0000\u0000Design/methodology/approach\u0000Using a sample of China’s listed firms from 2007 to 2021, the authors aim to find the relationship between customers’ financial restatements and their suppliers’ audit opinions. Heckman selection model, placebo tests and other robustness checks are used as well.\u0000\u0000\u0000Findings\u0000The findings reveal that customers’ financial restatements have a significant effect on the likelihood of suppliers receiving modified audit opinions. This relationship is pronounced when suppliers face a higher level of financial constraints, exhibit poorer accounting conservatism or receive more negative media coverage. Additionally, this effect occurs through increased business risk and information risk, which heightens auditors’ perceived audit risk. Moreover, the study highlights the influence of switching costs, auditor expertise and restatement severity on this relationship.\u0000\u0000\u0000Practical implications\u0000Risks originating from customers can spread along the supply chain, emphasizing the necessity for auditors to give heightened attention to both the audited firms and their customer information. Moreover, regulators should carefully consider the important impact of customer information disclosures to maximize the protection of the interests of external information users.\u0000\u0000\u0000Originality/value\u0000This study not only confirms the crucial role of customer information disclosures in annual reports for stakeholders and auditors but also contributes to the existing literature on customer–supplier relationships.\u0000","PeriodicalId":47823,"journal":{"name":"Managerial Auditing Journal","volume":null,"pages":null},"PeriodicalIF":2.9,"publicationDate":"2024-02-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139833717","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Are out-of-period adjustments a type of stealth restatement? An examination of nonaudit services and out-of-period adjustments","authors":"Cori Crews, John Abernathy, Jimmy Carmenate, Divesh Sharma, Vineeta Sharma","doi":"10.1108/maj-02-2023-3821","DOIUrl":"https://doi.org/10.1108/maj-02-2023-3821","url":null,"abstract":"<h3>Purpose</h3>\u0000<p>The purpose of this study is to investigate the association between nonaudit services (NAS) and out-of-period adjustments (OOPAs). Over the years, the number of OOPAs has risen while the number of restatements has decreased. This could indicate an improvement in financial reporting quality. It could also indicate the use of a type of stealth restatement for opportunistic purposes. These less prominent restatements are more likely to go undetected and could perpetuate opportunistic disclosure and mitigate the likelihood of unfavorable market reactions.</p><!--/ Abstract__block -->\u0000<h3>Design/methodology/approach</h3>\u0000<p>The authors use a two-stage multivariate regression analysis to examine the relationship between NAS and the reporting of an OOPA. The authors use prior research on NAS to guide the model development. The authors perform several robustness checks including different types of NAS and different characteristics of OOPAs.</p><!--/ Abstract__block -->\u0000<h3>Findings</h3>\u0000<p>The results indicate that NAS has a significantly negative association with the existence of OOPAs. The core findings suggest that NAS does not impair auditor independence. Rather, greater amounts of NAS may contribute to knowledge spillover, which leads to higher financial reporting and audit quality. The results are robust to several additional tests.</p><!--/ Abstract__block -->\u0000<h3>Research limitations/implications</h3>\u0000<p>The results raise interesting implications for regulators, executives, auditors, investors and future research. The authors provide insight into the relationship between NAS and auditor independence.</p><!--/ Abstract__block -->\u0000<h3>Originality/value</h3>\u0000<p>To the best of the authors’ knowledge, prior research has not considered the effect of NAS on OOPAs. The authors contribute to the literature by providing evidence that OOPAs, a form of stealth restatements, is an important consideration in audit quality research.</p><!--/ Abstract__block -->","PeriodicalId":47823,"journal":{"name":"Managerial Auditing Journal","volume":null,"pages":null},"PeriodicalIF":2.9,"publicationDate":"2024-02-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139759794","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Pension funding gaps: do mandated external governance mechanisms matter?","authors":"Trevor England","doi":"10.1108/maj-05-2023-3912","DOIUrl":"https://doi.org/10.1108/maj-05-2023-3912","url":null,"abstract":"\u0000Purpose\u0000This study aims to examine whether and how the experience of specialized external governance mechanisms mandated by the Employee Retirement Income Security Act of 1974 – the actuary and auditor – affect pension plan funding.\u0000\u0000\u0000Design/methodology/approach\u0000This study uses data from annual pension plan regulatory reports (Form 5500), Form 10-K filings, Form DEF 14A filings (company proxy statements) and publicly available data sources. The hand-collected data include information related to the pension plan’s actuary and auditor and various pension plan data disclosed in the company’s financial statement footnotes.\u0000\u0000\u0000Findings\u0000The author finds that more experienced actuaries and auditors are associated with better funded pension plans, especially when the company has higher financial risk or lower board independence. Additional analyses indicate that companies with more experienced actuaries and pension plan auditors are more likely to make higher annual pension plan contributions and hold fewer Level 3 fair value assets.\u0000\u0000\u0000Originality/value\u0000The dearth of pension plan governance research generally focuses on whether and how internal governance mechanisms affect pension plan funding. To the best of the author’s knowledge, this is the first empirical study of the relationship between external pension plan governance mechanisms and pension plan funding.\u0000","PeriodicalId":47823,"journal":{"name":"Managerial Auditing Journal","volume":null,"pages":null},"PeriodicalIF":2.9,"publicationDate":"2024-02-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139784778","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Pension funding gaps: do mandated external governance mechanisms matter?","authors":"Trevor England","doi":"10.1108/maj-05-2023-3912","DOIUrl":"https://doi.org/10.1108/maj-05-2023-3912","url":null,"abstract":"\u0000Purpose\u0000This study aims to examine whether and how the experience of specialized external governance mechanisms mandated by the Employee Retirement Income Security Act of 1974 – the actuary and auditor – affect pension plan funding.\u0000\u0000\u0000Design/methodology/approach\u0000This study uses data from annual pension plan regulatory reports (Form 5500), Form 10-K filings, Form DEF 14A filings (company proxy statements) and publicly available data sources. The hand-collected data include information related to the pension plan’s actuary and auditor and various pension plan data disclosed in the company’s financial statement footnotes.\u0000\u0000\u0000Findings\u0000The author finds that more experienced actuaries and auditors are associated with better funded pension plans, especially when the company has higher financial risk or lower board independence. Additional analyses indicate that companies with more experienced actuaries and pension plan auditors are more likely to make higher annual pension plan contributions and hold fewer Level 3 fair value assets.\u0000\u0000\u0000Originality/value\u0000The dearth of pension plan governance research generally focuses on whether and how internal governance mechanisms affect pension plan funding. To the best of the author’s knowledge, this is the first empirical study of the relationship between external pension plan governance mechanisms and pension plan funding.\u0000","PeriodicalId":47823,"journal":{"name":"Managerial Auditing Journal","volume":null,"pages":null},"PeriodicalIF":2.9,"publicationDate":"2024-02-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139844543","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}