Gail L. Cook, Curtis L. DeBerg, Alfred R. Michenzi, Bernard J. Milano and Dasaratha V. Rama
Mrs. D.K. Padma and T.L. Rama Char
Thiourea and nicotinic acid are good inhibitors for the corrosion of brass in nitric acid solutions. Polarisation studies indicate that the anode polarisation with nicotinic acid…
Abstract
Thiourea and nicotinic acid are good inhibitors for the corrosion of brass in nitric acid solutions. Polarisation studies indicate that the anode polarisation with nicotinic acid is less than that on the cathode side. Both the inhibitors increase the cathode and anode polarisation considerably.
Steven V. Campbell, Barbara P. Reider and Robert C. Maloney
The aim of this paper is to analyze the impact of corporate governance (focused on some key mechanisms as board size, board independence, managerial ownership, institutional…
Abstract
The aim of this paper is to analyze the impact of corporate governance (focused on some key mechanisms as board size, board independence, managerial ownership, institutional ownership, and chief executive officer duality) on financial analysts’ behavior in US. Results from panel data analysis for 294 US listed firms observed from 2007 to 2014 show that several attributes of the board of directors and audit committee have no effects on the number of analysts who are following the firm and the properties of analysts’ earnings forecasts. Findings also suggest that firms with independent and large boards and blockholders ownership benefit of more analyst following. In addition, it is proven that analysts’ earnings forecasts are optimistic and more accurate for companies where blockholder ownership, either by managers or external entities have larger quoted spreads but of lower quality for the ones which have greater independent board members and institutional investor’s holding.
Details
Keywords
Kathleen Bakarich and Devon Baranek
This study aims to examine the impact of Financial Accounting Standard Board’s Accounting Standard Update (ASU) 2014–15 on auditors’ going concern reporting. ASU 2014–15 provides…
Abstract
Purpose
This study aims to examine the impact of Financial Accounting Standard Board’s Accounting Standard Update (ASU) 2014–15 on auditors’ going concern reporting. ASU 2014–15 provides accounting guidance for managers related to going concern issues, but there is evidence that regulatory changes affect auditor behavior. The authors examine if auditors’ propensity to issue going concern opinions (GCOs) for non-bankrupt, financially distressed firms changes after ASU 2014–15 became effective, and if the proportion of client bankruptcies with prior GCOs changes after ASU 2014–15 became effective.
Design/methodology/approach
The authors examine audit reports for non-bankrupt, financially stressed firms three years before and after the effective date of ASU 2014–15 to see if the propensity to issue a GCO differs in the pre- vs post-period. The authors then examine bankrupt, financially stressed firms to determine if the proportion of bankruptcies preceded by a GCO differs in the pre- vs post-period.
Findings
The authors find a significant increase in GCO reporting for non-bankrupt, financially stressed firms in the post-ASU 2014–15 period, suggesting auditor conservatism increased. The propensity for auditors to issue a GCO to bankrupt firms also increased significantly in the post-ASU period, providing evidence that auditors became more accurate, as more bankruptcies were preceded by a GCO than in the pre-ASU period.
Originality/value
This study uses new legislation which creates an exogenous shock to going concern reporting. Models and techniques are combined from prior literature and extended to investigate auditors’ reporting behaviors using two important and distinct samples.
Details
Keywords
Abstract
Purpose
The purpose of this paper is to investigate the determinants of audit committee meeting frequency in Chinese listed companies.
Design/methodology/approach
A multiple linear regression model, derived from the logarithmic model proposed by Raghunandan and Rama, is used to examine the determinants and an unbalanced panel data fixed effects model was used for robust tests.
Findings
Based on 912 year‐firm observations, the authors found that audit committee meeting frequency was negatively associated with the proportion of shares owned by a majority shareholder and the number of audit committee meetings is less in stated‐owned firms than privately‐owned firms. Both audit committee and firm size were found to be positively associated with the frequency and there was a negative relationship between the proportion of independent directors on a board of directors and the number of audit committee meetings in China. However, no evidence was found of the associations of the frequency with the proportion of directors who are accounting experts on the audit committee, the CEO‐Chairman duality, management ownership, board size, BIG4 and profitability.
Originality/value
This is the first paper to present empirical evidence on the determinants of audit committee meeting frequency in Chinese listed companies. The paper looks into the impact of firm ownership on the meeting frequency in China and finds that the number of audit committee meetings is less in stated‐owned listed firms than privately‐owned listed firms.
Details
Keywords
Iris Stuart, Yong-Chul Shin, Donald P. Cram and Vijay Karan
The use of choice-based, matched, and other stratified sample designs is common in auditing research. However, it is not widely appreciated that the data analysis for these…
Abstract
The use of choice-based, matched, and other stratified sample designs is common in auditing research. However, it is not widely appreciated that the data analysis for these studies has to take into account the non-random nature of sample selection in these designs. A choice-based, matched or otherwise stratified sample is a nonrandom sample that must be analyzed using conditional analysis techniques. We review five research streams in the auditing area. These streams include work on determinants of audit litigation, audit fees, auditor reporting in financially distressed firms, audit quality and auditor switches. Cram, Karan, and Stuart (CKS) (2009) demonstrated the accuracy of conditional analysis, compared to unconditional analysis, of nonrandom samples through the use of simulations, replications, and mathematical proofs. Papers since published have continued to rely upon questionable research, however, and it is hard for researchers to identify what is the reliability of a given work. We complement and extend CKS (2009) by identifying audit papers in selected research streams whose results will likely differ if the data gathered are analyzed using conditional analysis techniques. Thus research can be advanced either by replication and reanalysis, or by refocus of new research upon issues that should no longer be viewed as settled.
Details
Keywords
Santanu Mitra, Bikki Jaggi and Talal Al-Hayale
The purpose of the study is to examine the effect of managerial stock ownership on the relationship between material internal control weaknesses (ICW) and audit fees.
Abstract
Purpose
The purpose of the study is to examine the effect of managerial stock ownership on the relationship between material internal control weaknesses (ICW) and audit fees.
Design/methodology/approach
The paper uses multivariate regression analyses on a sample of 1,578 ICW and 1,578 pair-matched (based on both propensity score and managerial stock ownership) non-ICW firm observations for a period from 2004 to 2010 to investigate how managerial incentive at various stock ownership levels impacts the relationship between material ICW and audit fees.
Findings
For the firms with low managerial stock ownership (up to 5 per cent stockholdings), the authors find no significant effect of managerial ownership on the positive relationship between audit fees and ICW. However, the impact of managerial stock ownership on the relationship between ICW and audit fees is significantly positive when managerial ownership is medium, i.e. more than 5 per cent and less than or equal to 25 per cent stockholdings, and the managerial ownership effect is even higher when managerial stock ownership is high, i.e. more than 25 per cent stockholdings. The result is especially robust for the ICW firms with high managerial stock ownership (i.e. where managers hold more than 25 per cent equity stake in the firms). The additional analyses further show that this managerial ownership effect is more pronounced when the firms suffer from company-level material control weaknesses that have pervasive negative effect on financial reporting quality.
Research limitations/implications
The results imply that in a low managerial ownership firms with substantial misalignment between manager and shareholder incentives, managerial stock ownership has little effect on the ICW and audit fee relationship. But when managers’ ownership interest is at a high level, they are more prone to purchase higher-quality audit service to reduce the risk of financial misstatements due to material ICW, which results in higher audit fees. The results add to the audit fee literature by suggesting that managerial incentive at various ownership levels is a critical governance factor that impacts auditor’s fee structure especially when higher reporting risk exists due to material ICW.
Originality/value
Prior literature documents that there is some relationship between managerial attributes and earnings quality; however, there is no substantive empirical evidence on the effect of managerial stock ownership on audit pricing when client companies face higher risk of financial misreporting as a result of material ICW. In this study, the authors seek answers to these empirical questions and fill the gap in the literature.
Details
Keywords
This chapter provides an innovative way to introduce a series of managerial assignments that will allow students to take an example of a real company that interests them and…
Abstract
This chapter provides an innovative way to introduce a series of managerial assignments that will allow students to take an example of a real company that interests them and answer questions designated by the instructor. The assignments are individualized to let students choose their area of interest and apply accounting concepts. At the same time, the instructor formulates questions for students to answer based on the materials covered. This chapter also provides an implementation process and student feedback.