Earnings announcement delays and implications for the auditor-client relationship

Abstract

We examine whether delays in the expected release of annual earnings have implications for the future auditor-client relationship. Managers have strong incentives to release earnings on schedule, and auditors play an important role in helping their clients avoid costly earnings announcement delays. We find an increased likelihood of subsequent auditor-client realignments after earnings announcement delays. We further find that clients changing auditors realign with audit firms that better meet their earnings announcement timing demands, without finding evidence of a significant compromise in the reliability of the financial statement numbers in the earnings announcement. Our results help inform regulatory concerns about audit market concentration and how audit firm turnover has the potential to impact the auditor-client dynamic. While it is possible that auditor turnover could lead to a power imbalance where clients gain leverage in the relationship, our results suggest otherwise. JEL classifications M41 . M42

Pengaruh Fee Audit, Pergantian Auditor, Dan Ukuran Perusahaan Terhadap Audit Delay

“…Hubungan antara temuan penelitian ini dengan teori keagenan adalah konflik yang terjadi akibat asimetri informasi diantara manajemen dan pemegang saham serta perubahan dalam dinamika perusahaan yang terkait dengan pergantian auditor tidak berkontribusi pada peningkatan audit delay. ini Temuan ini sejalan dengan penelitian yang dilakukan oleh (Ruchana & Khikmah, 2020); (Lestariningrum T et al, 2020); (Chapman et al, 2021), yang juga menemukan bahwa pergantian auditor tidak memengaruhi audit delay.…”