Auditor Independence, Non-Audit Services, and Restatements: Was the U.S. Government Right?

Cheng, Lester C.

doi:10.2469/dig.v34.n4.1551

Cited by 1 publication

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“…Second, following Chan and Wu (2011), we use the modified audit opinion to proxy for auditor independence. We define a financial restatement ( Restatement ) as correcting an economic misstatement in a subsequent reporting period due to managerial discretion (Raghunandan et al , 2003; Kinney et al , 2004). For example, Restatement equals 1 in the fiscal year 2009 if the company restates the fiscal-2009 financial statements in a subsequent year.…”

Section: Additional Analysismentioning

confidence: 99%

Does mandatory CSR disclosure affect audit efficiency? Evidence from China

Wang

2023

MAJ

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Purpose This study aims to examine the causal relationship between mandatory CSR disclosure and financial audit efficiency. Design/methodology/approach The authors use the unique institutional setting of China, where a subset of listed firms are mandated to disclose their corporate social responsibility (CSR) reports. The authors use propensity score matching and difference-in-differences approaches to compare audit efficiency in the pre- and post-mandatory CSR disclosure periods between the treatment and control groups. The regression models are estimated with robust standard errors clustered at the firm level. Findings This study finds that following China’s adoption of the mandatory disclosure of CSR, audit report lags decreased by 6% on average, suggesting that audit efficiency improved greatly following mandatory CSR disclosure. Moreover, this association is stronger when firms have better CSR performance, higher CSR report preparation costs, more earnings management before disclosure regulations and better internal controls and when firms belong to high-profile industries and in Big 4 (Big 10) accounting firms. Moreover, neither audit quality nor audit fees decrease when shorter audit lags occur for firms with mandatory CSR disclosures. Overall, the evidence suggests that mandatory CSR disclosure has a positive effect on audit efficiency and that the improvement of audit efficiency does not come as a consequence of reducing audit fees or deteriorating audit quality. Research limitations/implications The results reported in this study have practical and policy implications for policymakers, accounting firms and auditors to pay more attention to CSR information. Originality/value This study provides evidence of the causal relationship between mandatory CSR disclosure regulation and audit efficiency. It enriches the research on audit service production efficiency from the perspective of nonfinancial information disclosure.

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Section: Additional Analysismentioning

confidence: 99%

Does mandatory CSR disclosure affect audit efficiency? Evidence from China

Wang

2023

MAJ

View full text Add to dashboard Cite

show abstract

Auditor Independence, Non-Audit Services, and Restatements: Was the U.S. Government Right?

Cited by 1 publication

References 0 publications

Does mandatory CSR disclosure affect audit efficiency? Evidence from China

Does mandatory CSR disclosure affect audit efficiency? Evidence from China

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