This thesis investigates the role of financial reporting enforcement in the decision making of financial statement preparers and auditors. Enforcement bodies are governmental or private agencies that have the authority to review audited financial statements of listed corporations. Enforcement, in general, describes the supervision of listed firms by such agencies with the objective of ensuring compliance with accounting standards. Prior literature indicates that the introduction of enforcement mechanisms is associated with positive capital market effects such as increasing liquidity. Moreover, error announcements by enforcers result in significant negative market reactions for the censured firms. Hence, enforcement provides additional incentives for firms to prepare error-free financial statements. Moving beyond capital market effects, it is the aim of this thesis to provide evidence on the direct effects of enforcement on the decision making of involved stakeholders. This thesis includes three studies which examine the influence of enforcement on disclosure and accounting choices of managers and auditors.
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