This study examines the association between the selection of an industry-specialist auditor and corporate social responsibility (CSR).We find that firms with higher CSR ratings are more likely to hire industry-specialist auditors (national-level industry leaders, citylevel industry leaders or joint city-national industry leaders). Moreover, firms with better CSR performance related to product quality and the environment in controversial industries are found to select non-specialized auditors. The results suggest that such firms may overinvest in CSR activities associated with the environment and product issues to disguise the sin nature of their manufactured goods, and simultaneously engage low quality auditors perhaps to avoid full disclosure of potential environmental and legal liabilities. Overall, we conclude that CSR is associated with the non-controversial firms ensuring high quality financial reporting in response to societal expectations, and thus CSR firms in such industries have strong incentives to engage industry-specialist auditors.

The public controversies over the implementation of Statement of Financial Accounting Standard No. 157 (SFAS 157) and its impact on the recent financial crisis motivate us to examine the association between fair values and reporting lags. With a sample of U.S. banking institutions, we find that less verifiable fair value information is associated with longer earnings announcement lag and audit report lag. Longer earnings announcement lags resulting from less verifiable fair value information are due to the additional time of managerial estimations. Less verifiable fair values may also result in longer audit report lags due to the added training for auditors. Our study extends the current literature on fair values and reporting lags. Our findings contribute to the contemporary research on the timeliness of financial information disclosures which promotes the efficient functioning of the economy. Moreover, the findings of our study may be of interest to the global regulators, investors and other financial statement users.