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Article
Publication date: 3 September 2018

Akihiro Noda

This study aims to examine how firms choose an auditor in the presence of bilateral information asymmetry between insiders and outsiders regarding firms’ economic performance.

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Abstract

Purpose

This study aims to examine how firms choose an auditor in the presence of bilateral information asymmetry between insiders and outsiders regarding firms’ economic performance.

Design/methodology/approach

This study presents a one-period reporting bias game with a firm’s risk-neutral manager and investors in the capital market, in which a manager with private information chooses an auditor and reports earnings to investors who acquire their own information. The analysis focuses on the possibility that the manager engages an auditor to constrain earnings management as a commitment device to minimize reporting error cost.

Findings

The results show that the manager’s optimal auditor choice is determined based on investor sensitivity to the earnings report, and managerial incentives for earnings management, discounted by the uncertainty of reporting errors. The results for optimal auditor choice are counterintuitive: engaging a higher-quality auditor could seemingly be associated with aggressive earnings management.

Originality/value

This study advances the understanding of the theoretical basis of firms’ auditor choice in the context of market investors’ information acquisition when auditors exercise their discretion in reporting. This issue has received limited attention in the extant literature.

Details

Journal of Financial Reporting and Accounting, vol. 16 no. 3
Type: Research Article
ISSN: 1985-2517

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Article
Publication date: 1 October 2000

Makoto Mizukawa, Hideo Matsuka, Toshihiko Koyama and Akihiro Matsumoto

The Japan Robot Association (JARA) has been conducting standardization activities (ORiN: Open Robot Interface for the Network) in which the main subject is the network interface…

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Abstract

The Japan Robot Association (JARA) has been conducting standardization activities (ORiN: Open Robot Interface for the Network) in which the main subject is the network interface in the robot controller. In the 1999 international robot exhibition, our activities and results were opened and demonstrated to the public. In this demonstration, industrial robots from 13 Japanese domestic robot manufacturers, that had different specifications and structures, were connected to each other with a communication network. Using ORiN API, applications for production system management and 3‐D robot motion monitoring were demonstrated. The purpose of this demonstration is to verify the openness of the networked robot and to certify the proposed de facto standard protocol and robot model. The background of those activities, the outline of the design guidelines, the demonstration for verification, a schedule and plan towards the de facto and/or ISO standard are all mentioned.

Details

Industrial Robot: An International Journal, vol. 27 no. 5
Type: Research Article
ISSN: 0143-991X

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