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The purpose of this paper is to examine the association between the cost of debt (COD) and auditor industry expertise using Taiwanese data. Since previous studies (Li et al., 2010) have only examined the relation between industry specialization and COD at the audit firm level in western countries, the authors further examine the association between industry specialization and COD at the individual auditor level in an Asian context.

The authors use the interest rate on the firm’s debt as a proxy variable for the COD (Francis, Khurana and Pereira, 2005). The authors adopt three different methods to measure industry specialization, which consist of the auditors’ market share in terms of client sales and number of clients, and client assets.

The results indicate that the clients of industry specialists at individual auditor levels have a lower COD.

First, the authors extend the research of Li et al. (2010) and find that the clients of individual auditor industry specialists also have a lower COD. Second, the authors also believe the evidence on the effects of industry expertise at the individual auditor level may have policy implications for regulators and public investors. Finally, in contrast to works carried out in the US market, the authors provide empirical evidence for the relation between industry specialization and COD in an Asian market.

The purpose of this study is to investigate whether the likelihood that a firm will face financial statement fraud litigation is affected by the disclosure of internal control material weaknesses (MW) and the “busyness” of a firm’s board of directors.

The results are derived from logistic regression models and data are collected from the Audit Analytics database augmented by data from CompuStat, the Stanford Law School website and the SEC Accounting and Auditing Enforcement Releases. The authors also test for endogeneity with a propensity score matching procedure.

The authors find that an MW report is strongly associated with the likelihood of subsequent financial statement fraud litigation, and that the influence of entity-level MW on litigation likelihood is stronger than that of account-level MW. Moreover, the number of outside board directorships significantly increases the influence of entity-level MW on the likelihood of litigation, indicating that board of directors’ busyness significantly increases the risk of litigation.

Previous research notes that board members holding multiple directorships cannot effectively oversee the financial reporting process and, thus, are associated with poorer governance. The authors extend this implication of board busyness to the association between disclosure of MW type and the filing of subsequent litigation alleging financial statement fraud. To the best of the authors’ knowledge, no other research has done so.

The purpose of this study is to investigate the association between a corporate executive’s gender and audit fees. Based on the findings of extant research that there are gender-based differences that may have implications for the financial reporting process, the authors posit an association between CEO gender and audit fees.

The authors test their hypothesis by performing both univariate and multivariate regression analyses on a sample of 8,402 Compustat firm-year observations from US firms for 2003-2010.

The authors' findings indicate that firms with female CEOs are associated with higher audit fees. Their results hold after controlling for self-selection bias and factors shown by prior studies to be associated with audit fees.

Although the authors control for factors that would increase audit fees, their study is limited by the degree to which higher audit fees reflect higher quality audits. Also, because their sample is from large publicly traded nonfinancial firms, their results may not be applicable to other types of firms. The authors study has implications for policy setting because their findings provide some evidence of a significant association between a CEO characteristic (gender) and financial reporting quality. Their findings, thus, provide some support for the Securities and Exchange Commission requirement that CEOs should certify their firm’s financial statements.

The authors study contributes to the audit fees and corporate governance literature by providing empirical evidence of an association between audit fees and CEO gender. To their knowledge, no study, to date, has investigated this association.

The purpose of this study is to investigate the compliance of US‐traded foreign firms with Sarbanes‐Oxley section 404 (SOX 404) by examining recent changes in their material internal control weakness (ICW) disclosures. This study also seeks to explore as a result of compliance, whether large firms can improve their internal controls than small and mid‐sized businesses (SMBs) can.

This study uses a logit regression model to test the data collected from Compustat and AuditAnalytics databases.

Both US firms and US‐traded foreign firms from developed countries experienced a significant descending trend of material ICW disclosures from 2004 to 2006. US SMBs, like large US companies, improved internal controls.

Prior studies asserted that the environment of corporate governance is more favourable for firms in developed countries. This study documents that US‐traded foreign firms from developed countries adjust to SOX 404 more quickly than do those from developing countries, resulting in fewer material ICW disclosures.

Although SOX 404 imposes vast costs on US‐traded foreign firms, investors can benefit from the improved internal control over financial reporting, as the Securities and Exchange Commission asserts. This paper contributes to the literature that US‐traded foreign firms from developed countries adjust to SOX 404 more quickly than those from developing countries. Although the significant fixed cost of implementing SOX 404 impacts SMBs disproportionately, US SMBs, like larger firms, still show an improvement in their internal control systems over time.

The purpose of this paper is to investigate whether gender diversity of audit committees has a significant impact on the firm's earnings management.

This paper uses a performance‐adjusted discretionary accrual model to examine the association between gender variables and the firm's earnings management. Regression analysis is applied using 320 firms from the S&P Small Cap 600.

The authors find consistent evidence to show that the presence of a female director on the audit committee constrains earnings management by increasing negative (income‐decreasing) discretionary accruals.

Future research can explore the behavior of female managers by applying the gender theory. Furthermore, the paper's evidence has implications for regulators and policy makers, since the presence of a female director in the audit committee may affect management decisions and audit quality in a positive way. Therefore, gender diversity on the board should be more strongly emphasized. Moreover, the presence of female members on the board may further enhance public confidence.

This research contributes to the existing literature on gender in four aspects. First, this research provides new evidence to reinforce the existing gender literature that women are more risk averse, cautious and ethical than men. Second, the findings showcase that gender theory can be applied into the research of management behavior. Third, the findings are significantly important in contemporary corporate governance discussions over the SOX enactment and audit committee characteristics Fourth, this study sheds further light on the importance of having women on corporate boards and the positive outcomes that are associated with it, thereby serving as an encouraging force against the existence of the glass ceiling effect.

This paper aims to examine the relation between the cost of debt and the adoption of eXtensible Business Reporting Language (XBRL).

The financial data are obtained from the Compustat database. Regression analysis is used to examine the research hypotheses.

The authors find that both voluntary and mandatory adoption of XBRL lead to a lower cost of debt for firms, with weak evidence that this reduction is greater for the former than the latter.

The findings support the policy of the USA Securities and Exchange Commission (SEC), and thus this paper recommends that adoption of XBRL should be mandatory for all public firms.

The findings encourage top managers to develop their firms’ XBRL systems.

The results support the SEC’s policy of mandatory XBRL adoption, as it can lead to greater financial reporting transparency and mitigate information asymmetry between management and bondholders.

This study aims to analyze why listed Taiwanese firms uniquely rejected the early adoption of International Financial Reporting Standards (IFRS) in 2012. It investigates the underlying decision-making processes behind this policy reluctance to further understand the continuous phenomenon of rare voluntary IFRS adoption.

It reports on fieldwork evidence obtained in situ by in-depth interviewing in Mandarin. It uses qualitative methods, complemented by quantitative cost-benefit metrics of IFRS adoption. It presents five diverse illustrative case-study vignettes, using a judgment sample based on expert opinion.

While the net-benefits of implementing IFRS varied across firms, this study’s unanimous finding was that no firms (in the sample or population) adopted IFRS early, despite stated intentions to the contrary. The key reasons for shunning early IFRS adoption were found to be frequent changes in regulations, insufficient benefits from adopting IFRS and the undermining of comparability across companies, compounded with scarce preparation time. Further, this study found that the Taiwanese accounting regulator’s reluctance toward IFRS adoption, partly caused by a long-standing US influence, contributed to this anomalous outcome.

This study recommends two critical policy changes: more realistic timelines and less frequent regulatory changes.

To the best of the authors’ knowledge, this is the first study to investigate the reasons behind the anomaly of no early adoption of IFRS in Taiwan, using new primary data and illustrative case studies. Its novelty lies in extending understanding beyond the existing quantitative literature on accounting standards, using new “thick” qualitative evidence on motives for such choices and decision-making processes, which have been neglected in previous work.

The purpose of this paper is to examine the impact of ethical leadership on employee task performance, specifically the mechanisms through which ethical leadership impacts employee task performance and the moderating role of employee proactive personality. Social identity, social learning, and self-concordance theory were used to explain the way ethical leadership affects employee task performance, and provided another way to understand this relationship.

The authors collected survey-based dyadic data from middle management team members and subordinates in Chinese companies. Multiple regression analysis was used to test the research hypotheses.

The empirical findings indicate that ethical leadership positively influences employee task performance. Organizational identification (OID) mediates the relationship between ethical leadership and employee task performance. Furthermore, the relationship between ethical leadership and employee task performance via OID is moderated by employee proactive personality.

Employee task performance is critical for a firm’s competitive advantage. This paper adds to knowledge about the relationship between ethical leadership and employee task performance and contributes to effective management.