The present study aims at investigating the impact of the presence of audit committee and its characteristics on the corporate information environment. These characteristics include independence, financial expertise, size, and the gender of the audit committee. Although several methods have been discussed for measuring information environment in the accounting and finance literature, this resea...

We examine whether the provision of non-audit services by auditors is negatively correlated with firm value and the quality of earnings. Because of concerns regarding the effect of non-audit services on auditor independence, the Securities and Exchange Commission recently issued revised auditor independence rules requiring firms to disclose in their annual proxy statement the amount of fees pai...

In Malaysia, all companies are required to have their accounts audited. However, the application of this mandatory requirement on small companies is currently under review, and the issue is whether audit firms could survive should voluntary audit be implemented. Salleh et al. (2008) surveyed the perception of small audit firms on this issue. Most of the respondents perceived that the benefits d...

Since 1999, regulators have attempted to improve the monitoring of financial reporting by exerting significant pressure on firms to appoint financial experts to their audit committees. Yet, many firms have been reluctant to do so, which has made these firms more prone to financial reporting problems. We examine appointments of financial experts to the audit committees of S&P 1500 firms during t...

This study investigates the audit firm’s decision to protect its partners’ personal assets by becoming a limited liability partnership (LLP). We find that the likelihood of an audit firm switching from unlimited to limited liability is increasing in its size and exposure to litigation risk. We find no evidence that audit firms supply lower audit quality, lose market share, or charge lower audit...

While concentration measures are a good indicator of market structure, the link with competitiveness is more complex than often assumed. In particular, the modern theory of industrial organisation makes no clear statement regarding the impact of concentration on competition – the focus of this paper is concentration and no inferences are made about competitive aspects of the market. The extent ...

In this study, we expand on several previous studies related to the materiality judgments and the auditor’s propensity to issue a going-concern opinion to financially troubled but non-bankrupt companies. We test the auditor’s materiality thresholds by investigating whether there is any significant difference in accuracy among audit firms, especially between Big Six (Five) and non-Big Six (Five)...

Executives are ‘affiliated’ if they previously worked for their companies’ audit firms. I find most affiliations (71.3%) occur when auditors become employees of audit clients (‘employment affiliations’), but affiliations also arise when companies hire executives’ former CPA firms (‘alma mater affiliations’). Affiliated companies are significantly more likely than unaffiliated companies to recei...