دانلود رایگان مقاله انگلیسی کیفیت حسابرسی در طول بحران مالی جهانی: دیدگاه سرمایه گذاران - الزویر 2017

Abstract

In response to the concerns raised by the financial media and regulators about the audit quality around the recent global financial crisis (GFC), this study examines whether investors also perceived the audit quality to have declined during the GFC. Based on a sample of US firms over 2003-2009 and using the information content of earnings announcements as the proxy for the investors’ perception of the audit quality, we find evidence of an increase in the information content of earnings announcements during the GFC period compared to pre-GFC period. The subsample analysis shows an increase in the information content of earnings announcements for both the non-financial and financial firms. Our results also show that the increase in the information content of earnings announcements is not dependent on auditors’ size (Big 4 versus non-Big 4 auditors) or auditors’ independence (based on the level of audit, non-audit and total audit fee). Additional tests also reveal that the reported increase in the information content of earnings announcements are not driven by a general decline in the richness of information environment during the GFC. Overall, our results provide a strong evidence of an increase in the perceived quality of audits during the GFC for US firms non-financial and financial firms.

5. Conclusion

Auditors play a significant role in enhancing investors’ confidence on financial markets. The recent global financial crisis shocked investors’ confidence on financial markets and drove many, including members of Investor Advisory Group of PCAOB, to put a question mark on quality of auditor’s performance around the GFC. In the absence of wake up calls from the auditors to warn market of the financial distress faced by several firms (Woods et al., 2009) (PCAOB 2011), many commentators believe that market’s trust on unqualified financial statements declined as a results of the GFC (Sikka, 2009). Most of the existing literature on audit quality focuses on whether auditors increased their efforts and whether their propensity to issue qualified reports increased during the GFC or whether firms were motivated to increase the audit quality. Complementary to such studies, we focus on the investors’ perspective and examine whether investors’ perception of audit quality changed during the GFC.

In general and contrary to the criticism heaved by financial median and regulator we find that investors perceived audit quality to have increased during the GFC. Our results also show that the increase in the investors’ perceived quality of audit was not dependent on the auditors’ size or their apparent fee dependence on clients. We also find that the increase in the investors’ perception of audit quality is not driven by a decrease in the richness of information stemming from other sources during the GFC. These findings corroborate the findings of Xu et al. (2011), Xu et al. (2013) and Geiger et al. (2014) who do not find evidence of auditors being lax in issuing qualified reports during the GFC.