Search results

This study aims to examine whether auditors who specialize in research and development (R&D) activities help reduce managers’ opportunistic adjustment of R&D expenditure for real earnings management (REM).

Using a sample of US firms during the 2001–2017 period, the authors identify auditors’ R&D specialization as their prior experience of auditing R&D expenses spent by each client’s peers. The authors measure R&D-based REM as the negative deviation from the predicted level of R&D expenditure.

The authors find that clients of R&D specialist auditors are less likely to engage in REM through a discretionary reduction of R&D expenditure. This effect is more pronounced when clients face higher competition, have larger investment opportunities and entail higher audit risks.

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.

This study contributes to the literature by documenting the governance role played by R&D specialist auditors in clients’ real economic decisions. Moreover, the study identifies R&D as a distinct area of auditor specialization.

Despite the importance of research and development (R&D), information on its value is not readily available to managers. This study aims to explore the role of common auditors, who audit multiple peer firms in the product market, in clients’ R&D investment decisions. This study highlights common auditors as information intermediaries who affect corporate R&D investment, focusing on the importance of knowledge resources in R&D investment and the limited ability of peers’ public information to communicate the value of R&D.

This study employs pairwise data of firm-peer-year observations to identify a common auditor who provides audit services to the focal firm and its peer firm. This study examines how a firm’s R&D investment changes when the firm’s incumbent auditor provides audit services to peers and analyzes various factors that moderate the effect of common auditors.

Peer firms audited by the same auditor make similar R&D investment decisions. This effect is more pronounced when the auditor specializes more in auditing R&D, when the auditor has a long-term client relationship, and when the firms exhibit a higher level of demand for incremental information relevant to R&D investment. Consistent with the beneficial role of common auditors, firms that are more responsive to auditor-provided information engage more actively in innovation activities in subsequent years.

This study deepens the understanding of how networks created by common auditors facilitate information flow among client firms and shape these firms’ R&D investment decisions.

This study aims to examine how auditors respond to the revelation of clients’ corporate fraud.

This study uses an ordinary least squares estimation to examine how audit fees and audit turnover change after the revelation of corporate fraud.

After a client discloses fraudulent activities, average audit fees significantly increase due to an increase in audit hours, rather than in audit premiums. Both new and continuing auditors increase audit hours for fraud firms, but only new auditors charge higher audit fees for the increased effort. In addition, when auditors are designated by regulators following the revelation of fraud, audit fees and premiums increase, but audit hours do not. Finally, auditor turnover becomes more frequent after the revelation of fraud. Overall, the findings suggest that auditors update their assessment of audit risks after fraud revelation and, thus, adjust their audit pricing and client acceptance decisions.

The study provides regulators and audit practitioners with insights into how to audit contract characteristics and regulatory intervention (auditor designations) affect auditors’ response to increased audit risks.

The study contributes to the auditing literature and practice by providing evidence on how auditors respond to the revelation of fraudulent activities and how their response depends on their ability to determine audit fees. Moreover, we provide novel evidence that audit contracting characteristics and regulatory requirements result in different responses of auditors toward changes in audit risks.

This study aims to explore the effects of consumer resilience and brand familiarity on the relationship between corporate social responsibility (CSR) and consumer attitudes toward the company conducting CSR in places that have suffered from traumatic events such as natural or anthropogenic disasters and uncertainty of public health issue.

This study collected survey-based data from 194 participants who suffered from natural and anthropogenic disasters in the state of Texas. Path analysis was used to test each structural relationship among variables after verifying the reliability and validity of each variable. Analysis of variance was used to investigate the difference in resilience between the two groups.

This study verified that there is a positive relationship between CSR and consumer attitude. More importantly, the results show that both resilience and familiarity play an important role as a mediator in the relationship between CSR and attitudes. In particular, it tells us that a group with high resilience shows a higher possibility of having positive attitudes toward the company than another group having low resilience.

This study empirically tested the impacts of CSR, resilience and brand familiarity on building consumer attitudes. Furthermore, this study explored the effects of resilience and brand familiarity on the relationship between CSR and attitudes. Thus, this study was able to contribute to understanding the effects of CSR, resilience and familiarity on building a positive attitude in the specific settings, in terms of traumatic events, theoretically and practically.