Corporate social responsibility (CSR) and initial public offerings (IPOs) are important aspects of research across multiple academic disciplines, primarily accounting, finance, and management. This research paper seeks to link streams of research through the development of a content analytic dictionary using computer-aided text analysis (CATA).The dictionary, validated in the context of U.S. IPOs between 2011 and 2013, revealed four dimensions of corporate social responsibility. Each of these dimensions is used to predict IPO size in terms of offering price and total shares offered, as well as underpricing on the first day of trade. This research provides a new measure of CSR that can be generalized to other text documents issued by a corporation. Researchers may find this tool useful as we continue to advance our understanding of the explicit and implicit meanings embodied in the CSR disclosures made by corporations.
Abstract:As a response to the increased demand for timely and ongoing assurance over the effectiveness of risk management and control systems, companies are moving towards a more automated control environment through the implementation of continuous audit modules. The purpose of this study is to evaluate external auditors' reliance on internal audit's work when advanced audit techniques are introduced by the internal auditor and the impact this reliance has on budgeted audit hours. Prior literature suggests that internal control deficiencies also have an impact on external auditor reliance and the audit budget. The reliance decision of an external auditor has important economic consequences and implications for efficiency and effectiveness of the overall audit. In recent years, the PCAOB has encouraged greater such reliance to improve audit efficiency. An experiment is conducted with 87 experienced external auditors to investigate the theorized effects. Using a 2 x 2 between subjects factorial design, the frequency of the internal audit (traditional vs. continuous audit) and prior year material weakness (absent vs. present) are manipulated. Consistent with predictions, we find that auditors are willing to rely more on internal audit work in a continuous audit environment than in a traditional environment, and this effect is magnified when the prior year audit report on the effectiveness of internal controls indicates that controls are working properly. The presence of a material weakness, however, negatively impacts judgments on the budget for the valuation of a complex account. In addition, both material weakness and continuous audit have an impact on the overall audit budget, which is reduced only when the company has no prior year material weakness and a functioning continuous audit module is put in place. The results show that auditors increase budgeted hours for the engagement at a higher rate when the client uses traditional internal audit procedures.Keywords: Continuous Audit; Continuous Monitoring; Material Weakness; Internal Audit Reliance; Audit Budgets 3 INTRODUCTIONCompanies are under constant pressure to improve the reliability and accountability of their financial information in order to comply with regulatory bodies and to compete for capital in the evolving global business environment. As a response to global demands for timely and ongoing assurance over the effectiveness of risk management and control systems, companies are increasingly moving towards automated control environments through the implementation of technologies such as continuous audit modules (PwC 2006;IIA 2009;Protiviti 2013).Continuous audit is defined as "a method used to perform control and risk assessments automatically on a more frequent basis" (Coderre, 2006, pg. 1). Continuous audit technology allows ongoing audit testing of financial transactions and associated controls in real time. The internal audit profession is thus better equipped for addressing the needs of stakeholders, in spite of the challenges it faces: question...
Embracing the spirit of the Pathways Commission's focus of enhancing the value of practitioner/educator exchanges, the inaugural Journal of Information Systems Conference (JISC) brought together 30 academic researchers and 15 practitioners to discuss the current state and the future direction of information technology (IT) audit research and practice. Panelists, comprised of practitioners from government, public accounting, and industry, provided insight into current IT audit issues. The first panel discussed the role of IT auditors in helping organizations meet compliance requirements and ensuring that information systems add value to the organization. The second panel addressed the future of IT audit in a world of advanced analytics and emerging technologies. Although the panels addressed separate topics, common themes emerged from the discussions. Issues facing the IT audit profession as a result of the increasing volume of data available, coupled with changing technology and increasing regulatory requirements, underscored much of the discussion. Big Data, compliance, and emerging technology issues were addressed from both internal audit and external audit perspectives. This commentary provides a review and synthesis of the information presented during panel discussions at the conference and suggests potential research questions.
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