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We empirically test whether audit quality is affected when part of an SEC issuer's audit is outsourced to auditors other than the principal auditor (“participating auditors”). We find a significantly negative market reaction and a significant decline in earnings response coefficients (ERCs) for experimental issuers disclosed for the first time as having participating auditors involved in their audits. However, we find no market reaction and no decline in ERCs for a matching sample of issuers that are not disclosed as using participating auditors, nor for issuers disclosed for the second or third time as using participating auditors. We also find actual audit quality as measured by absolute value of performance-matched discretionary accruals is lower for the experimental issuers, although we find no difference in audit fees paid by the experimental and matching issuers in a multivariate model. Our findings suggest that the PCAOB's proposed rule requiring disclosure of the use of other auditors in addition to the principal auditor would provide information useful to investors in assessing audit quality for SEC issuers.

Purpose -The primary purpose of this study is to investigate the association between the family status and corporate social responsibility disclosure (sustainability reporting) of large US companies. Design/methodology/approach -The authors gathered data from GRI database as well as from Compustat. They use both univariate and multivariate statistical analyses. Findings -The authors find that there is no statistically significant difference in the likelihood of sustainability reporting between family and non-family firms of the S&P 500. They document important associations among the propensity to issue sustainability reports, the level of details of sustainability reports and certain firm-specific and industry characteristic variables.Research limitations/implications -This study is focused on S&P 500 firms and may not be generalizable to smaller firms. Differences among family firms such as stock ownership and management control may affect sustainability reporting and are important topics for future research. Practical implications -Society should be aware of the motivations and incentives that govern sustainability reporting decisions by both family and non-family firms. The authors show that both family and non-family companies use voluntary disclosure in general and sustainability reporting in particular as a way of mitigating regulatory, political and litigation costs. Originality/value -No prior study, to the authors' knowledge, has examined the association between sustainability reporting and the family status of firms. The authors include suggestions for future research in this area and hope that their study will provide motivation and guidance to researchers to study this topic further.

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