Audit time pressure and earnings quality: An examination of accelerated filings

Lambert, Tamara A.; Jones, Karen H.; Brazel, Joseph F.; Showalter, D. Scott

doi:10.1016/j.aos.2017.03.003

Cited by 127 publications

(92 citation statements)

References 46 publications

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“…Prior archival studies use a variety of proxies for audit quality, including financial statement restatements, audit fees, going‐concern opinions, lawsuits filed against auditors, client bankruptcies, level of abnormal accruals, and SEC enforcement actions (e.g., Carcello and Nagy ; Francis, Maydew, and Sparks ; Francis and Michas ; Lambert, Jones, and Brazel ; Lennox ; Palmrose ; Stanley and DeZoort ). The variety of proxies used to represent a single construct indicates a diversity of views among researchers regarding a reliable measure of audit quality and suggests that a few chosen proxies cannot adequately represent the construct of audit quality.…”

Section: Background Literature and Data Collectionmentioning

confidence: 99%

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Understanding Audit Quality: Insights from Audit Professionals and Investors

Christensen

Glover

Omer

et al. 2015

Contemporary Accting Res

283

112

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Projects seeking to define, measure, and evaluate audit quality are on the agendas of auditing standards setters as well as audit firms. The Public Company Accounting Oversight Board (PCAOB) currently provides information regarding audit quality through the release of inspection reports, and the Board intends to establish and report audit quality indicators. To provide additional perspective on audit quality, we obtain auditors' and investors' views, definitions, and indicators of audit quality. We find that investors' definitions of audit quality focus more on inputs to the audit process than do auditors', and that investors view the number of PCAOB deficiencies as an indicator of overall firm quality. We find a consensus that auditor characteristics may be the most important determinants of audit quality, and that restatements may be the most readily available signal of low audit quality. We relate responses to a general audit quality framework, provide support for archival audit research, and identify additional disclosures that participants suggest could signal audit quality. Taken together, we provide evidence regarding the construct of audit quality in the post-SOX environment, evaluate many of the audit quality indicators proposed by the PCAOB, and suggest avenues for future research.Comprendre la qualit e de l'audit : points de vue de professionnels de l'audit et d'investisseurs R ESUM EDes projets visant a d efinir, mesurer et evaluer la qualit e de l'audit figurent au programme des instances de normalisation en mati ere d'audit de même que des cabinets d'audit. Le ) 2. We use the term "auditors or "audit professionals" throughout the paper to describe both partner and senior manager participants; over 80 percent of our audit professional survey responses are from partners. Untabulated analysis indicates that partners' and senior managers' responses are not statistically different (p > 0.10 in all univariate comparisons). Further, we use the term "investors" throughout the paper to describe our investor participants. These participants have educational background and reported investing experience that are equivalent to or greater than those of investor participants reported on in the prior literature (Elliott 2006;Frederickson and Miller 2004;Maines and McDaniel 2000), which suggests that they are experienced and knowledgeable investors. See section 3 for additional details. 3.Investor response rate was approximately 5 percent, consistent with Dichev, Graham, Harvey, and Rajgopal (2013). Because of confidentiality concerns, we were not provided the number of auditor participants solicited by each firm and thus auditor response rates are not available. However, the completion rate of auditors who started the survey was approximately 85 percent. See section 2 for additional discussion regarding data collection.

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Section: Background Literature and Data Collectionmentioning

confidence: 99%

“…(), Glover, Hansen, and Seidel (), Houston (), Lambert et al. (), López and Peters (), and McDaniel ().…”

Section: Attributes Of Audit Qualitymentioning

confidence: 99%

Understanding Audit Quality: Insights from Audit Professionals and Investors

Christensen

Glover

Omer

et al. 2015

Contemporary Accting Res

283

112

View full text Add to dashboard Cite

show abstract

“…Importantly, they found the quality of earnings and accruals were not affected by delays, except for those companies that reported earnings before the completion of their audits. More recently, Lambert et al (2016) asserted that these SEC filing deadlines increased time pressures for auditors of accelerated filers. As an apparent result, companies that were unprepared to meet these accelerated filing deadlines frequently filed their 10-K's late and experienced reductions in earnings quality.…”

Section: Background On Financial Reporting Timeliness and The Regulatmentioning

confidence: 99%

An International Perspective on Audit Report Lag: A Synthesis of the Literature and Opportunities for Future Research

et al. 2016

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Audit report lag (ARL) is the length of time from a company's fiscal year-end to the audit report date, and is often viewed as the most important financial reporting timeliness determinant. Given that timeliness is an area of interest to investors, managers, regulators, auditors and academics, an understanding of ARL determinants is extremely important. As financial markets become more globally oriented, an international understanding of ARL determinants becomes even more important. This paper summarizes the extant literature on ARL and its determinants with an emphasis on international literature. Our review categorizes prior research based on company-specific and auditrelated factors, and explores the associations that have been identified with respect to ARL. Finally, we identify possible areas of interest not currently present in the literature and speculate on several opportunities for future research.

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“…For example, a threat of legal liability can increase judgment quality (Hackenbrack and Nelson ; Blay ), and a threat of PCAOB inspections appears to improve auditor decisions about internal control audit reports (DeFond and Lennox 2017). In contrast, fear of losing a client (Gramling ; Blay ) or missing a deadline (Lambert et al ; Bhaskar et al ) can decrease the quality of audit judgments. Many of these extrinsic motivators have been studied in accounting under the umbrella of accountabilities—auditors are viewed as being accountable to supervisors, clients, and regulators for making decisions that please these relevant others in order to gain external rewards or avoid punishment (Gibbins and Newton ).…”

mentioning

confidence: 99%

It Goes without Saying: The Effects of Intrinsic Motivational Orientation, Leadership Emphasis of Intrinsic Goals, and Audit Issue Ambiguity on Speaking Up

Kadous

Proell²,

Rich

et al. 2019

Contemporary Accting Res

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Regulation requires auditors to raise significant audit issues and concerns to the attention of audit engagement leadership and requires leadership to encourage such communication. This research demonstrates, using an experiment and a survey, that audit team members' willingness to speak up about such issues is associated with their intrinsic motivational orientation. Based on this result, we test whether audit leadership can leverage this relationship to increase speaking up, particularly when audit issues are more ambiguous, by emphasizing intrinsic goals. Results across three additional experiments indicate that auditors whose leaders emphasize intrinsic goals, whether directly or through tone at the top and firm culture, are more likely to speak up than are other auditors. We also find that auditors are more likely to speak up when an audit issue is less versus more ambiguous. We conclude that leadership can fulfill their obligation to encourage upward communication by emphasizing intrinsic versus extrinsic goals, regardless of the level of ambiguity surrounding the audit issue.

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Audit time pressure and earnings quality: An examination of accelerated filings

Cited by 127 publications

References 46 publications

Understanding Audit Quality: Insights from Audit Professionals and Investors

Understanding Audit Quality: Insights from Audit Professionals and Investors

An International Perspective on Audit Report Lag: A Synthesis of the Literature and Opportunities for Future Research

It Goes without Saying: The Effects of Intrinsic Motivational Orientation, Leadership Emphasis of Intrinsic Goals, and Audit Issue Ambiguity on Speaking Up

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