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Prior research has estimated piece-meal the determinants of audit fees, non-audit fees and abnormal accruals. Intuition, informal analysis, and a variety of theories suggest that audit fees, non-audit fees, and abnormal accruals are jointly determined. We address this endogeneity issue by modeling the confluence of audit fees, fees for non-audit services and abnormal accruals in a system of simultaneous equations. Our joint estimation provides a starting point to look simultaneously at several competing theories. Using audit and non-audit fee data from the UK for 1994–2000, we find evidence consistent with knowledge spillovers (or economies of scope) from auditing to non-audit services and from non-audit services to auditing. While knowledge spillovers from non-audit services to auditing have been found in prior research [e.g. see Simunic, 1984], the presence of knowledge spillovers from auditing to non-audit services is a new result. Contrary to recent results in Ferguson et al. (2000) and Frankel et al. (2002), we do not find support for the assertion that fees for non-audit services increase abnormal accruals. In fact, contrary to the results in Ashbaugh et al. (2003) and Chung and Kallapur (2003), we find that non-audit fees decrease abnormal accruals, which we attribute to the productive effects of non-audit services. We also find evidence that audit fees increase abnormal accruals, consistent with behavioral theories of unconscious influence or bias in the auditor-client relation. The findings are robust to tests with US data. Copyright Springer Science + Business Media, LLC 2006Auditing, Auditor independence, Earnings management, Abnormal accruals, Economies of scope, Endogeneity,

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In this study, the spatial characteristics of agricultural drought vulnerability in China were investigated using a GIS-based agricultural drought vulnerability assessment model, which was constructed by selecting three agricultural drought vulnerability factors. Seasonal crop water deficiency, available soil water-holding capacity and irrigation were identified as the main indicators of agricultural drought vulnerability in China. The study showed that the distribution of seasonal crop moisture deficiency showed significant differentiation in both north-south and east-west directions, and the agricultural drought vulnerability presented a similar trend. At a regional scale, southern and eastern China typically has a low-and moderate-vulnerability to drought, while high and very high vulnerability to agricultural drought is observed in northern and western China. In terms of China's agricultural regions, the central part of the southwest region, the area between the southern Huang-Huai-Hai region and the northern part of the Middle and lower reaches of the Yangtze River region, and the northeast region are the areas of low agricultural drought vulnerability in China, while areas of high agricultural drought vulnerability are mainly located in the Inner Mongolia, Loess Plateau and Gan-Xin regions. Due to differences in the physical and social-economic conditions within the agricultural areas, vulnerability to agricultural drought exhibits substantial variability both between different agricultural regions and within the same region. The methodology of grid-cell-based agricultural drought vulnerability assessment, developed in this study, provides a foundation for better description of the differences in regional and even smaller scale.

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Earnings non-synchronicity captures the extent to which firm-specific factors determine a firm's earnings, and has important implications to a firm's information environment.Prior research shows that high earnings non-synchronicity impedes corporate outsiders' information processing. Given managers generally possess superior information about their firms' unique operating and reporting strategies, we extend prior research by examining the influences of earnings non-synchronicity on managers' propensity to provide voluntary disclosures and on the market's reaction to management disclosures. Empirical evidence shows that managers are more likely to provide earnings forecasts as earnings non-synchronicity increases. In addition, the stock price response coefficient of management forecast news increases with earnings non-synchronicity, suggesting that investors perceive management forecasts as being of higher quality than investors' own information when firm-specific factors are more important in earnings determination. Correspondingly, we find that the relative accuracy of management forecasts (compared with the accuracy of prevailing analyst consensus forecasts) improves with earnings non-synchronicity.

Earnings non-synchronicity captures the extent to which firm-specific factors determine a firm's earnings, and has important implications to a firm's information environment. Prior research shows that high earnings non-synchronicity impedes corporate outsiders' information processing. Given managers generally possess superior information about their firms' unique operating and reporting strategies, we extend prior research by examining the influences of earnings non-synchronicity on managers' propensity to provide voluntary disclosures and on the market's reaction to management disclosures. Empirical evidence shows that managers are more likely to provide earnings forecasts as earnings non-synchronicity increases. In addition, the stock price response coefficient of management forecast news increases with earnings non-synchronicity, suggesting that investors perceive management forecasts as being of higher quality than investors' own information when firm-specific factors are more important in earnings determination. Correspondingly, we find that the relative accuracy of management forecasts (compared with the accuracy of prevailing analyst consensus forecasts) improves with earnings non-synchronicity.