This paper examines whether the likelihood of accounting restatements is associated with Big 4 industry auditor specialists, measured at both the partner level and the audit firm level. We focus on a sample of listed firms in Taiwan, where audit reports must be audited and signed by the two signing auditors as well as by an audit firm. Extending previous studies, we classify industry specialists into three groups: (a) auditors that are industry specialists at both the individual partner level (i.e., the lead signing auditors) and the firm level; (b) auditors that are industry specialists at the individual partner level but not at the firm level; and (c) auditors that are industry specialists at the firm level but not at the individual partner level. The results reveal that clients of signing auditor specialists, either alone or in conjunction with firm-level specialists, are less likely to make accounting restatements relative to those of other auditors. We find no evidence that firm-level auditor specialists alone are associated with a smaller likelihood of accounting restatements. However, a firm-level industry expert does matter where the lead auditor is an expert. The results suggest that differential likelihood of accounting restatements due to Big 4 industry expertise is primarily attributable to the signing partner specialists rather than to auditor specialists at the firm level. We also find that differential restatement likelihood due to signing auditors' expertise is driven by the lead auditor's expertise, rather than by the concurring auditor's expertise

This paper first examines whether the Big 4 audit quality is associated with auditor industry expertise, measured as both individual partner- and audit firmlevel leadership. We focus on a sample of listed firms in Taiwan, where audit reports must be audited and signed by the two signing auditors as well as by an audit firm. For accruals analyses, we find that differential discretionary accruals due to industry expertise are driven by a combination of firm and partner expertise. For audit opinion analyses, we find that differential likelihood of a modified audit opinion (hereafter, MAO) is primarily attributable to signing auditor specialists. We also find that firm-level specialists alone are not associated with a higher likelihood of issuing a MAO. However, firm-level specialists, in combination with signing auditor specialists, can add something over and above the effects of the signing auditor specialists alone. Second, we further examine whether there is differential audit quality between signing auditors (i.e., lead and concurring auditors). We find that clients of lead signing auditor specialists, either alone or in conjunction with concurring auditor specialists, have smaller accruals and are more likely to receive a MAO compared to those of nonspecialists. However, concurring auditor specialists alone are not associated with higher audit quality, in terms of either smaller accruals or a higher MAO likelihood. Thus, we conclude that industry expertise is not homogeneous across individual auditors within the same audit firm in Taiwan

We hypothesize that if individual auditors possess unique audit styles that they consistently apply to different audit engagements, then client firms with a common signing auditor will exhibit higher earnings comparability. Using a large sample of Chinese firms, we find that client firms report more comparable earnings when they are audited by the same individual auditor than when they are audited by (1) different audit firms, (2) the same audit firm, but different audit offices, and (3) the same audit office, but different individual auditors. The individual auditor style effect is stronger for larger audit firms, senior signing auditors, and signing auditors with more stable teamwork experience. We also document that having a common signing auditor is associated with lower analyst earnings forecast error and dispersion for client firms. This study contributes to the literature by showing that individual auditors have a significant impact on client firms' earnings comparability.

This study examines the effects of the mandatory adoption of International Financial Reporting Standards (IFRS) on the contract terms of bank loans in a global setting. Using a difference-in-differences design based on 26,474 bank loans in 31 countries during the 2000-2011 period, we find that borrowers who mandatorily adopt IFRS experience an increase in interest rates, a reduction in the use of accounting-based financial covenants, an increase in the likelihood that a loan is collateralized, a reduction in loan maturity, and an increase in the fraction of a loan retained by lead arrangers. These findings are robust to the removal of the 2008 financial crisis from our analysis, as well as to the matching of IFRS and non-IFRS borrowers on various country-and firm-level characteristics. Furthermore, we find that these changes are more pronounced for borrowers with greater financial reporting changes, as well as those with poorer accounting quality after IFRS adoption.

This study examines whether the Taiwanese regulation requiring disclosure of earnings forecasts in the IPOs resulted in disclosure of more optimistic earnings forecasts and whether the forecast error was reduced more by manipulating the reported earnings rather than revising the earnings forecasts to meet the forecast error threshold. The study is based on 759 forecasts issued by the Taiwanese IPO firms from 1994 to 2001, i.e. 8-year period after the regulation was modified to increase the forecast error threshold to 20%. The findings show that the disclosure regulation resulted in more optimistic forecasts than conservative forecasts, especially for firms expecting better performance in the forecast year compared to the previous year. Firms disclosing optimistic earnings forecasts engaged more in manipulation of reported earnings than revision of forecasts to meet the forecast error threshold. These findings thus suggest that the disclosure regulation resulted in earnings manipulation, which reduced the quality of reported earnings. Copyright Springer Science + Business Media, Inc. 2006Earnings management, Disclosure regulation, Discretionary accruals, Mandatory earnings forecasts, Forecast error threshold,