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In this paper, we study a broad sample of Arthur Andersen clients and investigate whether the decline in Andersen's reputation, due to its criminal indictment on March 14, 2002, adversely affected the stock market's perception of its audit quality. Because these reputational concerns are more of an issue if an auditor's independence is impaired, we investigate the relationship between the abnormal market returns for Andersen clients around the time of the indictment announcement and several fee-based measures of auditor independence. Our results suggest that when news about Andersen's indictment was released, the market reacted negatively to Andersen clients. More importantly, we find that the indictment period abnormal return is significantly more negative when the market perceived the auditor's independence to be threatened. We also examine the abnormal returns when firms announced the dismissal of Andersen as an auditor. Consistent with the audit quality explanation, we document that when firms quickly dismissed Andersen, the announcement returns are significantly higher when firms switched to a Big 4 auditor than when they either switched to non-Big 4 auditors or did not announce the identity of the replacement auditor. Our empirical results support the notion that auditor reputation and independence have a material impact on perceived audit quality and the credibility of audited financial statements, and that the market prices this.

The spin relaxation time of electrons in GaAs and GaN are determined with a model that includes momentum scattering by phonons and ionized impurities, and spin scattering by the Elliot-Yafet, D'yakonov-Perel, and Bir-Aronov-Pikus mechanisms. Accurate bands generated using a long-range tight-binding Hamiltonian obtained from empirical pseudopotentials are used. The inferred temperature-dependence of the spin relaxation lifetime agrees well with measured values in GaAs. We further show that the spin lifetimes decrease rapidly with injected electrons energy and reach a local maximum at the longitudinal optical phonon energy. Our calculation predicts that electron spin lifetime in pure GaN is about 3 orders of magnitude longer than in GaAs at all temperatures, primarily as a result of the lower spin-orbit interaction and higher conduction band density of states.Comment: 8 pages and 3 figure