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Full-Text Articles in Business
Technical Default, Auditors' Decisions And Future Financial Distress, Michael Wilkins
Technical Default, Auditors' Decisions And Future Financial Distress, Michael Wilkins
Michael S Wilkins
A study was conducted to examine auditors' responses to first-time debt covenant violations and to assess whether these responses can be employed to forecast financial distress. Data were drawn from a sample of 159 companies traded on the NYSE/AMEX or NASDAQ that had initial default dates ranging from 1978 to 1988. The findings reveal that auditors are more likely to need debt reclassification when the violations are not waived by lenders. However, the waiver decision does not seem to significantly affect the auditor's qualification decision. For companies experiencing technical default, the audit option is an important determinant of future financial …
Internal Control Disclosures, Monitoring, And The Cost Of Debt, Dan Dhaliwal, Chris Hogan, Robert Trezevant, Michael Wilkins
Internal Control Disclosures, Monitoring, And The Cost Of Debt, Dan Dhaliwal, Chris Hogan, Robert Trezevant, Michael Wilkins
Michael S Wilkins
We test the relationship between the change in a firm's cost of debt and the disclosure of a material weakness in an initial Section 404 report. We find that, on average, a firm's credit spread on its publicly traded debt marginally increases if it discloses a material weakness. We also examine the impact of monitoring by credit rating agencies and/or banks on this result and find that the result is more pronounced for firms that are not monitored. Additional analysis indicates that the effect of bank monitoring appears to be the primary driver of these monitoring results. This finding is …
Bringing Darkness To Light: The Influence Of Auditor Quality And Audit Committee Expertise On The Timeliness Of Financial Statement Restatement Disclosures, Jaime Schmidt, Michael Wilkins
Bringing Darkness To Light: The Influence Of Auditor Quality And Audit Committee Expertise On The Timeliness Of Financial Statement Restatement Disclosures, Jaime Schmidt, Michael Wilkins
Michael S Wilkins
This study investigates whether auditor quality and audit committee expertise are associated with improved financial reporting timeliness as measured by the duration of a financial statement restatement’s ‘‘dark period.’’ The restatement dark period represents the length of time between a company’s discovery that it will need to restate financial data and the subsequent disclosure of the restatement’s effect on earnings. For a sample of dark restatements disclosed between 2004 and 2009, we find that companies that engage Big 4 auditors have shorter dark periods than companies that do not engage Big 4 auditors. We also find that companies with more …
An Empirical Investigation Of Stock Dividends-In-Kind, L. Fields, Michael Wilkins
An Empirical Investigation Of Stock Dividends-In-Kind, L. Fields, Michael Wilkins
Michael S Wilkins
We investigate share price reactions to announcements of dividends payable in the common stock of corporations different from the issuing firm. We find that firms that declare these dividends (typically investment companies) experience positive abnormal returns upon announcement. We also find that such dividends are more likely to be declared when the shares to be distributed have peaked in value. Consistent with this finding, we document negative announcement-period abnormal returns for firms having their shares distributed. Additional tests reveal that prices respond more negatively when the information signal is strongest, when outside ownership is more dispersed, and when management is …
Does A Lack Of Choice Lead To Lower Quality?: Evidence From Auditor Competition And Client Restatements, Nathan Newton, Dechun Wang, Michael Wilkins
Does A Lack Of Choice Lead To Lower Quality?: Evidence From Auditor Competition And Client Restatements, Nathan Newton, Dechun Wang, Michael Wilkins
Michael S Wilkins
We examine the relationship between auditor competition and the likelihood of financial restatements that occur as a result of failures in the application of GAAP. Policy makers and audit market participants have expressed concern that the current level of auditor competition is low, resulting in a negative impact on audit quality. However, we find that restatements are more likely to occur in metropolitan statistical areas (MSAs) that have higher auditor competition. The association between audit market competition and restatements is statistically and economically significant. Our finding that audit quality is higher when auditor competition is lower suggests that at least …