Distracted Auditors and Corporate Reporting Environment

Kim Ittonen, Haroon Afzali*, Mansoor Afzali

*Corresponding author for this work

Research output: Chapter in Book/Report/Conference proceedingConference contributionScientificpeer-review

Abstract

We exploit non-accounting related class action suits against audit client-firms as an exogenous shock that shifts auditors’ attention towards the sued client, to test how auditors allocate resources and time and its subsequent effect on audit quality. Adopting this identification strategy, we show that client firms whose offices are situated in a different city as compared to the auditor’s office, experience more restatements in the years of the distraction as compared to
client firms that have their offices in the same city as the auditor’s offices. Results show that only firms situated in a different city experience a decline in their audit quality. Moreover, distracted audit offices are less likely to gain a new client. Results hold after a series of robustness checks.
Original languageEnglish
Title of host publicationProceedings of the EAA Annual Congress 2022
Publication date2022
Publication statusPublished - 2022
MoE publication typeA4 Article in conference proceedings

Areas of Strength and Areas of High Potential (AoS and AoHP)

  • AoS: Financial management, accounting, and governance

Fingerprint

Dive into the research topics of 'Distracted Auditors and Corporate Reporting Environment'. Together they form a unique fingerprint.

Cite this