The DOI matches its Crossref record; 27 of the 27 references it cites were found in a registry or an index.
Relation between Audit Effort and Financial Report Misstatements: Evidence from Quarterly and Annual Restatements
Abstract
We identify two research design issues that explain the inconsistency between the theoretically predicted negative relation between audit effort and misstatements (measured using restatements) and empirical findings. First, auditor risk adjustment behavior induces an upward bias in the association between audit effort and restatements. Second, the theoretical prediction applies only to audited financial reports (i.e., annual reports) and not to unaudited reports (i.e., interim quarterly reports). Comingling restatements of audited with unaudited reports introduces an additional upward bias in the association between audit effort and restatements. After correcting for these two sources of bias, we find a robust negative association between audit effort and annual report restatements. JEL Classification: M49. Data Availability: Data used in this study are available from public sources.
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Cites
Auditor size and audit quality
DeAngelo, L. E. (1981) · Journal of Accounting and Economics · doi:10.1016/0165-4101(81)90002-1 · Cited by 5,813
Predicting Material Accounting Misstatements*
DECHOW, P. M., GE, W., LARSON, C. R., & SLOAN, R. G. (2011) · Contemporary Accounting Research · doi:10.1111/j.1911-3846.2010.01041.x · Cited by 1,818
Accruals Quality and Internal Control over Financial Reporting
Doyle, J. T., Ge, W., & McVay, S. (2007) · The Accounting Review · doi:10.2308/accr.2007.82.5.1141 · Cited by 1,366
The impact of performance-based compensation on misreporting
Burns, N., & Kedia, S. (2006) · Journal of Financial Economics · doi:10.1016/j.jfineco.2004.12.003 · Cited by 1,340
Determinants of market reactions to restatement announcements
Palmrose, Z.-V., Richardson, V. J., & Scholz, S. (2004) · Journal of Accounting and Economics · doi:10.1016/j.jacceco.2003.06.003 · Cited by 1,259
Restoring Trust after Fraud: Does Corporate Governance Matter?
Farber, D. B. (2005) · The Accounting Review · doi:10.2308/accr.2005.80.2.539 · Cited by 1,239
SRINIVASAN, S. (2005) · Journal of Accounting Research · doi:10.1111/j.1475-679x.2005.00172.x · Cited by 1,044
Efendi, J., Srivastava, A., & Swanson, E. P. (2007) · Journal of Financial Economics · doi:10.1016/j.jfineco.2006.05.009 · Cited by 1,003
Hennes, K. M., Leone, A. J., & Miller, B. P. (2008) · The Accounting Review · doi:10.2308/accr.2008.83.6.1487 · Cited by 983
Auditor Independence, Non‐Audit Services, and Restatements: Was the U.S. Government Right?*
Kinney, W. R., Palmrose, Z., & Scholz, S. (2004) · Journal of Accounting Research · doi:10.1111/j.1475-679x.2004.t01-1-00141.x · Cited by 880
Cited by
A review of archival auditing research
DeFond, M., & Zhang, J. (2014) · Journal of Accounting and Economics · doi:10.1016/j.jacceco.2014.09.002 · Cited by 3,188
Michelon, G., Patten, D. M., & Romi, A. M. (2019) · European Accounting Review · doi:10.1080/09638180.2018.1469424 · Cited by 204
The Data Analytics Journey: Interactions Among Auditors, Managers, Regulation, and Technology*
Austin, A. A., Carpenter, T. D., Christ, M. H., & Nielson, C. S. (2021) · Contemporary Accounting Research · doi:10.1111/1911-3846.12680 · Cited by 172
Metadata
- Authors
- Lobo, G. J., & Zhao, Y.
- Venue
- The Accounting Review
- Publisher
- American Accounting Association
- Published
- 2013-02-01
- Volume
- 88
- Issue
- 4
- Pages
- 1385-1412
- ISSN
- 0001-4826 (ISSN-L)
- 1558-7967
- OpenAlex
- W2044500653
- Cited by
- 441
- References
- 27
- FWCI
- 62.49
- Type
- journal article
- Language
- en
- Open access
- closed
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