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Full-Text Articles in Business Law, Public Responsibility, and Ethics

Societal Trust And Corporate Tax Avoidance, Kiridaran Kanagaretnam, Jimmy Lee, Chee Yeow Lim, Gerald Lobo Dec 2018

Societal Trust And Corporate Tax Avoidance, Kiridaran Kanagaretnam, Jimmy Lee, Chee Yeow Lim, Gerald Lobo

Research Collection School Of Accountancy

Using aninternational sample of firms from 25 countries and a country-level index for societal trust, we document that societal trust is negatively associated with tax avoidance, even after controlling for other institutional determinants, such as home country legal institutions and tax system characteristics.We explore the effects of two country-level institutional characteristics—strength of lega linstitutions and capital market pressure—on the relation between societal trust and tax avoidance. We find that the relation between trust and tax avoidance is less pronounced when legal institutions in a country are stronger and is more pronounced when capital market pressure is stronger ...


Cross-Country Evidence On The Role Of Independent Media In Constraining Corporate Tax Aggressiveness, Kiridaran Kanagaretnam, Jimmy Lee, Chee Yeow Lim, Gerald J. Lobo Jul 2018

Cross-Country Evidence On The Role Of Independent Media In Constraining Corporate Tax Aggressiveness, Kiridaran Kanagaretnam, Jimmy Lee, Chee Yeow Lim, Gerald J. Lobo

Research Collection School Of Accountancy

Using an international sample of firms from 32 countries, we study the relation between media independence and corporate tax aggressiveness. We measure media independence by the extent of private ownership and competition in the media industry. Using an indicator variable for tax aggressiveness when the firm’s corporate tax avoidance measure is within the top quartile of each country-industry combination, we find strong evidence that media independence is associated with a lower likelihood of tax aggressiveness, after controlling for other institutional determinants, including home-country tax system characteristics. We also find that the effect of media independence is more pronounced when ...


Internal Governance And Real Earnings Management, Qiang Cheng, Jimmy Lee, Terry J. Shevlin Jul 2016

Internal Governance And Real Earnings Management, Qiang Cheng, Jimmy Lee, Terry J. Shevlin

Research Collection School Of Accountancy

We examine whether internal governance affects the extent of real earnings management in U.S. corporations. Internal governance refers to the process through which key subordinate executives provide checks and balances in the organization and affect corporate decisions. Using the number of years to retirement to capture key subordinate executives’ horizon incentives and using their compensation relative to CEO compensation to capture their influence within the firm, we find that the extent of real earnings management decreases with key subordinate executives’ horizon and influence. The results are robust to alternative measures of internal governance and to various approaches used to ...


The Influence Of Ethical Leadership On Managerial Performance: Mediating Effects Of Mindfulness And Corporate Social Responsibility, John Joseph Williams, Alfred E. Seaman Jun 2016

The Influence Of Ethical Leadership On Managerial Performance: Mediating Effects Of Mindfulness And Corporate Social Responsibility, John Joseph Williams, Alfred E. Seaman

Research Collection School Of Accountancy

In a continuing world of corporate misdeeds and unscrupulous decision making, much of the management and academic literatures points to the incomplete knowledge of the consequences of ethics leadership. One of the bastions of ethics gatekeeping in the firm is the CFO but remarkably scant information can be found on their perceptions concerning ethics leadership. This study addresses this void by examining mindfulness and corporate social responsibility (CSR) initiatives as new mediating linkages in comprehending the influence of ethics leadership on managerial performance. Findings reveal that ethical leadership is positively associated with CSR initiatives which, in turn, operate to enhance ...


The Downside Of The Network Ties Between Ceo/Cfos And Auditors Through External Directorships: Evidence From Auditor Selection And Subsequent Audit Quality, Jaeyoon Yu, Byungjin Kwak, Myung Seok Park, Yoonseok Zang May 2016

The Downside Of The Network Ties Between Ceo/Cfos And Auditors Through External Directorships: Evidence From Auditor Selection And Subsequent Audit Quality, Jaeyoon Yu, Byungjin Kwak, Myung Seok Park, Yoonseok Zang

Research Collection School Of Accountancy

This study examines whether the professional ties of Chief Executive Officers/Chief Financial Officers (CEO/CFOs) to auditors through external directorships affect auditor selection and subsequent audit quality. Professional ties to auditors arise when the CEO/CFO of a firm (referred to as the home firm) serves as an outside director of another firm that hires an auditor (a connected auditor). Using a sample of firms with auditor switches over the period 2003-2012, we find that home firms are more likely to appoint connected auditors. Furthermore, utilizing a difference-in-differences approach, we find that home firms appointing connected auditors experience a ...


Audit Committees And Financial Reporting Quality In Singapore, Kwong Sin Leong, Jiwei Wang, Themin Suwardy, Yuanto Kusnadi Apr 2015

Audit Committees And Financial Reporting Quality In Singapore, Kwong Sin Leong, Jiwei Wang, Themin Suwardy, Yuanto Kusnadi

Research Collection School Of Accountancy

No abstract provided.


Active Cds Trading And Managers’ Voluntary Disclosure, Jae Bum Kim, Pervin K. Shroff, Dushyantk Umar Vyas, Regina Wittenberg Moerman Jan 2015

Active Cds Trading And Managers’ Voluntary Disclosure, Jae Bum Kim, Pervin K. Shroff, Dushyantk Umar Vyas, Regina Wittenberg Moerman

Research Collection School Of Accountancy

No abstract provided.


Societal Trust And Corporate Tax Avoidance, Jimmy Kiat Bee Lee, Chee Yeow Lim, Kiridaran Kanagaretnam, Gerry Lobo Jun 2014

Societal Trust And Corporate Tax Avoidance, Jimmy Kiat Bee Lee, Chee Yeow Lim, Kiridaran Kanagaretnam, Gerry Lobo

Research Collection School Of Accountancy

No abstract provided.


Active Cds Trading And Managers’ Voluntary Disclosure, Jae Bum Kim, Pervin K. Shroff, Dushyantk Umar Vyas, Regina Wittenber Mar 2014

Active Cds Trading And Managers’ Voluntary Disclosure, Jae Bum Kim, Pervin K. Shroff, Dushyantk Umar Vyas, Regina Wittenber

Research Collection School Of Accountancy

No abstract provided.


Does Corporate Governance Make Financial Reports Better, Or Just Better For Equity Investors?, Dan Segal, Benjamin Segal, Shai Levi Jan 2014

Does Corporate Governance Make Financial Reports Better, Or Just Better For Equity Investors?, Dan Segal, Benjamin Segal, Shai Levi

Research Collection School Of Accountancy

Financial reports should provide useful information to both shareholders and creditors, according to U.S. accounting principles. However, directors of corporations have fiduciary duties only toward equity holders, and those fiduciary duties normally do not extend to the interests of creditors. We examine whether this slant in corporate governance biases financial reports in favor of equity investors, and in particular leads to a downward bias in reported debt that can hurt creditors. We focus on firms’ decision to issue structured debt securities that are classified as equity in financial reports and can circumvent debt covenants. We find that when the ...


Banks' Survival During The Financial Crisis: The Role Of Regulatory Reporting Quality, Jeffrey Ng, Tjomme O. Rusticus Dec 2012

Banks' Survival During The Financial Crisis: The Role Of Regulatory Reporting Quality, Jeffrey Ng, Tjomme O. Rusticus

Research Collection School Of Accountancy

In this paper, we investigate the effect of bank transparency before the crisis on bank stability during the financial crisis that erupted in 2008. Using a large sample of private and public commercial banks in the United States, we find that transparency enhances stability. We use two measures of transparency. We develop a new measure of financial reporting transparency based on loan loss provision estimation errors. We corroborate our findings using a second measure based on the incidence of accounting restatements. We show that lower transparency before the crisis is associated with higher non-performing loans and lower profitability at the ...


Executive Compensation And Regulation Imposed Governance: Evidence From The California Non-Profit Integrity Act (2004), Tharindra Ranasinghe, S. Khumawala, S. Mishra, S. Dhole Jul 2012

Executive Compensation And Regulation Imposed Governance: Evidence From The California Non-Profit Integrity Act (2004), Tharindra Ranasinghe, S. Khumawala, S. Mishra, S. Dhole

Research Collection School Of Accountancy

No abstract provided.


Client Conservatism And Auditor-Client Contracting, Yoonseok Zang, Chee Yeow Lim, Mark Defond Jun 2012

Client Conservatism And Auditor-Client Contracting, Yoonseok Zang, Chee Yeow Lim, Mark Defond

Research Collection School Of Accountancy

Auditors risk costly litigation and loss of reputation when they are associated with clients that engage in substandard financial reporting, and prior research argues that accounting conservatism reduces managements‟ tendency to misreport. Thus, we predict that client conservatism affects auditor-client contracting by reducing auditor litigation and reputation risk. Consistent with our predictions, we find that conservative audit clients are less likely to trigger auditor litigation or issue accounting restatements; and that auditors of conservative clients charge lower audit fees, issue fewer going concern opinions, and resign less frequently. Taken together, these findings are consistent with client accounting conservatism playing an ...


Geographic Proximity Between Auditor And Client: How Does It Impact Audit Quality?, Yoonseok Zang, Jong-Hag Choi, Kim Jeong-Bon, Aini Qiu May 2012

Geographic Proximity Between Auditor And Client: How Does It Impact Audit Quality?, Yoonseok Zang, Jong-Hag Choi, Kim Jeong-Bon, Aini Qiu

Research Collection School Of Accountancy

Using a large sample of audit client firms, this paper investigates whether and how the geographic proximity between auditor and client affects audit quality proxied by accrual-based earnings quality. We define an auditor as a local auditor (1) if the auditor’s practicing office is located in the same metropolitan statistical area (MSA) as the client's headquarters and (2) if the geographic distance between the two cities where the auditor’s practicing office and the client’s headquarters are located is within 100 kilometers or they are in the same MSA. As predicted, our empirical results are consistent with ...


Auditor Reporting Under Section 404: The Association Between The Internal Control And Going Concern Audit Opinions, Beng Wee Goh Apr 2012

Auditor Reporting Under Section 404: The Association Between The Internal Control And Going Concern Audit Opinions, Beng Wee Goh

Research Collection School Of Accountancy

Section 404 of the Sarbanes-Oxley Act introduced integrated audits of internal control over financial reporting and the financial statements. Since the internal control and audit reports are joint products of the audit process, we examine whether the issuance of an internal control material weakness opinion (MWO) influences, other things equal, the issuance of a going concern audit opinion (GCO). Using a sample of financially stressed companies, we find that the issuance of a MWO increases the likelihood of a GCO, suggesting that auditors respond to the uncertainty surrounding a MWO by issuing a GCO. Further, the positive association between MWO ...


Do Abnormally High Audit Fees Impair Audit Quality?, Jong-Hag Choi, Jeong-Bon Kim, Yoonseok Zang Nov 2010

Do Abnormally High Audit Fees Impair Audit Quality?, Jong-Hag Choi, Jeong-Bon Kim, Yoonseok Zang

Research Collection School Of Accountancy

This study examines whether and how audit quality proxied by the magnitude of absolute discretionary accruals is associated with abnormal audit fees, that is, the difference between actual audit fee and the expected, normal level of audit fee. The results of various regressions reveal that the association between the two is asymmetric, depending on the sign of the abnormal audit fee. For observations with negative abnormal audit fees, there is no significant association between audit quality and abnormal audit fee. In contrast, abnormal audit fees are negatively associated with audit quality for observations with positive abnormal audit fees. Our findings ...


Corporate Governance, Investor Protection, And Auditor Choice In Emerging Markets, Mahmud Hossain, Chee Yeow Lim, Patricia Mui Siang Tan Mar 2010

Corporate Governance, Investor Protection, And Auditor Choice In Emerging Markets, Mahmud Hossain, Chee Yeow Lim, Patricia Mui Siang Tan

Research Collection School Of Accountancy

In this study, we examine the effect of firm-level governance on the firm's choice of an external auditor. Further, we test how the relation between corporate governance and auditor choice may be affected by the strength of legal environment. The results show that firm-level governance scores are positively related to the firm's auditor choice. This association is strengthened by country-level legal protection. Specifically, the positive association between auditor choice and the firm-level governance scores is weaker (stronger) in a low (high) legal environment. These findings are robust after controlling for determinants that were found to be significant in ...


Does Auditor Tenure Improve Audit Quality? Moderating Effects Of Industry Specialization And Fee Dependence, Chee Yeow Lim, Hun-Tong Tan, Qiang Cheng Jan 2010

Does Auditor Tenure Improve Audit Quality? Moderating Effects Of Industry Specialization And Fee Dependence, Chee Yeow Lim, Hun-Tong Tan, Qiang Cheng

Research Collection School Of Accountancy

We investigate whether the relation between auditor tenure and audit quality is conditional on auditor specialization and fee dependence. Although prior studies have investigated the relation between extended auditor-client tenure and audit quality, none has examined how this relation is jointly influenced by both auditor specialization and fee dependence. Our main analyses, using accrual quality as a measure of audit quality, show that firms audited by specialists (vs. non-specialists) have relatively higher audit quality with extended auditor tenure, and that this relation is negatively moderated by auditors’ fee dependence on clients. These results are robust to sensitivity tests, and alternative ...


Audit Office Size, Audit Quality And Audit Pricing, Jong-Hag Choi, Francis Kim, Jeong-Bon Kim, Yoonseok Zang Jan 2010

Audit Office Size, Audit Quality And Audit Pricing, Jong-Hag Choi, Francis Kim, Jeong-Bon Kim, Yoonseok Zang

Research Collection School Of Accountancy

Using a large sample of U.S. audit client firms over the period 2000-2005, this paper investigates whether and how the size of a local practice office within an audit firm (henceforth, office size) is a significant, engagement-specific factor determining audit quality and audit fees over and beyond audit firm size at the national level and auditor industry leadership at the city or office level. For our empirical tests, audit quality is measured by unsigned abnormal accruals, and the office size is measured in two different ways: one based on the number of audit clients in each office and the ...


The Association Between Institutional Ownership And Audit Properties, Soongsoo Han, Tony Kang, Lynn Reesc Mar 2009

The Association Between Institutional Ownership And Audit Properties, Soongsoo Han, Tony Kang, Lynn Reesc

Research Collection School Of Accountancy

In this study, we examine how institutional ownership affects the quality and riskiness of the financial statement audit. We hypothesize that institutional investors can influence corporate policy to employ governance mechanisms that reduce their monitoring costs. Our evidence shows that firms are more likely to hire a Big 4 auditor (our proxy for audit quality) when long-term institutional ownership is high, suggesting that long-term institutional investors view high quality audits as a viable means of improving corporate governance while reducing their direct monitoring costs. We find no association between auditor choice and short-term institutional ownership. Next, we find that auditors ...


Audit Committees, Boards Of Directors And Remediation Of Material Weaknesses In Internal Control, Beng Wee Goh Jan 2009

Audit Committees, Boards Of Directors And Remediation Of Material Weaknesses In Internal Control, Beng Wee Goh

Research Collection School Of Accountancy

No abstract provided.


Managerial Ownership And Firms' Information Environment, Soongsoo Han, Tony Kang, Gerald Lobo Dec 2008

Managerial Ownership And Firms' Information Environment, Soongsoo Han, Tony Kang, Gerald Lobo

Research Collection School Of Accountancy

We examine the relation between managerial stock ownership and the firm’s information environment. We focus on three dimensions of the information environment: total, public, and private information precision (Barron, Kim, Lim and Stevens 1998). Our results suggest that firms’ total and public information precision are positively related to managerial ownership. In contrast, there is no clear pattern in private information precision across different levels of managerial ownership. We also observe that managerial ownership has a greater impact on the firm’s public information environment after the implementation of Regulation Fair Disclosure, suggesting that the regulation was effective in improving ...


Managerial Ownership, Corporate Monitoring And Audit Pricing, Soongsoo Han, Julia Higgs, Tony Kang Dec 2008

Managerial Ownership, Corporate Monitoring And Audit Pricing, Soongsoo Han, Julia Higgs, Tony Kang

Research Collection School Of Accountancy

We study whether managerial ownership and corporate monitoring (board quality and analyst coverage) relate to audit pricing. Managerial ownership has been identified as a fraud risk factor under SAS 99. However, the role of ownership is not clear. Under an alignment view, high levels of stock ownership align management with shareholders. Under an entrenchment view, high levels of ownership may motivate management to be self interested. Corporate monitoring, as measured by analyst coverage and overall board quality (Gomper’s index), are associated with information quality. Audit pricing will be affected to the extent that auditors perceive monitoring as being relevant ...


Managerial Ownership And Firms’ Information Environment, Soongsoo Han, Tony Kang, Gerald Lobo Aug 2008

Managerial Ownership And Firms’ Information Environment, Soongsoo Han, Tony Kang, Gerald Lobo

Research Collection School Of Accountancy

We examine the relation between managerial stock ownership and the firm’s information environment. We focus on three dimensions of the information environment: total, public, and private information precision (Barron, Kim, Lim and Stevens 1998). Our results suggest that firms’ total and public information precision are positively related to managerial ownership. In contrast, there is no clear pattern in private information precision across different levels of managerial ownership. We also observe that managerial ownership has a greater impact on the firm’s public information environment after the implementation of Regulation Fair Disclosure, suggesting that the regulation was effective in improving ...


Cross-Country Analysis Of Auditor Specialization Premium: Effect Of Legal, Extra-Legal And Political Environments, Sirinidhi Bin, M. Hossain, Chee Yeow Lim Jul 2008

Cross-Country Analysis Of Auditor Specialization Premium: Effect Of Legal, Extra-Legal And Political Environments, Sirinidhi Bin, M. Hossain, Chee Yeow Lim

Research Collection School Of Accountancy

Previous literature has provided mixed evidence of a premium in audit fee for industry-specialist auditors in US and other developed countries. In this cross-country study spanning twelve non-US countries, we provide evidence of such a premium in the international context, implying that specialist auditors provide a higher level of investor assurance than non-specialists. Further, we show that the average audit fee in countries with effective legal, extra-legal and political institutions is higher but the specialization premium is lower than in other countries. We interpret this finding as evidence that while effective institutions increase the demand for average level of audit ...


The Association Between Excess Audit Fees And Audit Quality: A Us-Uk Comparison, Soongsoo Han, Tony Kang, Yong Keun Yoo Jun 2008

The Association Between Excess Audit Fees And Audit Quality: A Us-Uk Comparison, Soongsoo Han, Tony Kang, Yong Keun Yoo

Research Collection School Of Accountancy

Prior studies that examine the association between excess audit fees and audit quality (measured by discretionary accruals) using US data fail to document a significant association. However, there is no convincing explanation for this result to date. In this study, we test a cancellation hypothesis, which suggests that the non-association might be due to the cancellation effect between the risk-effort effect and the bonding effect that excess fees capture. To the extent that excess fees capture the compensation for effort the auditor puts in for a risky client, which is not captured in the existing audit fee models (the risk-effort ...


Governance Role Of Auditors And Legal Environment: Evidence From Corporate Disclosure Transparency, Soongsoo Han, Tony Kang, Yong Keun Yoo May 2008

Governance Role Of Auditors And Legal Environment: Evidence From Corporate Disclosure Transparency, Soongsoo Han, Tony Kang, Yong Keun Yoo

Research Collection School Of Accountancy

This study examines whether auditor size associates with disclosure transparency. Given thatprior studies generally focus on discretionary accruals to investigate the relation betweenauditor size and financial reporting quality, there is little evidence on how auditor size relates toother attributes of reporting quality. Further, studies that examine this associationinternationally produce mixed results as to how auditor size relates to reporting quality indifferent legal origins. Focusing on corporate disclosure transparency (i.e., disclosure levels), wefind that auditor size and disclosure level are positively associated across countries and that theassociation is stronger in code law regimes than in common law regimes. The latter ...


The Association Between Audit Fees And Auditors' Opinions On Internal Control Weakness Under Section 404 Of The Sox, Jong-Hag Choi, Jeong-Bon Kim, Soo Young Kwon, Yoonseok Zang Dec 2007

The Association Between Audit Fees And Auditors' Opinions On Internal Control Weakness Under Section 404 Of The Sox, Jong-Hag Choi, Jeong-Bon Kim, Soo Young Kwon, Yoonseok Zang

Research Collection School Of Accountancy

The Section 404 of Sarbanes-Oxley Act (SOX) requires top management toestablish, maintain, and regularly evaluate the effectiveness of the internal controlover financial reporting (ICOFR), and obtain an auditor’s attestation. In this paper, weidentify 232 firms that received “Ineffective” audit opinion on the effectiveness ofICOFR due to one or more material weakness in internal control (WIC). We examinethe association between audit fees and the WIC for pre- and post-SOX period. Wefind that highly levered clients with the WIC paid greater audit fees even in the preSOXperiod and continuously paid the high fees in post-SOX period, whereas theloss-making clients with WIC ...


Auditor Locality, Audit Quality And Audit Pricing, Jong-Hag Choi, Jeong-Bon Kim, Aini Qiu, Yoonseok Zang Aug 2007

Auditor Locality, Audit Quality And Audit Pricing, Jong-Hag Choi, Jeong-Bon Kim, Aini Qiu, Yoonseok Zang

Research Collection School Of Accountancy

No abstract provided.


The Association Between Audit Quality And Abnormal Audit Fees, Jong-Hag Choi, Jeong-Bon Kim, Yoonseok Zang Aug 2006

The Association Between Audit Quality And Abnormal Audit Fees, Jong-Hag Choi, Jeong-Bon Kim, Yoonseok Zang

Research Collection School Of Accountancy

Using a sample of 9,820 firm-year observations over the 2000-2003 period, this paper examines whether, and how, audit quality proxied by unsigned discretionary accruals is associated with abnormal audit fees, i.e., actual audit fees in excess of expected, normal audit fees. The results of various regressions reveal that the association between the two is insignificant for the full sample, significantly positive for the subsample of clients with positive abnormal fees, and insignificantly negative for the subsample of clients with negative abnormal fees. The above results suggest that auditors’ incentives to compromise audit quality differ systematically for more profitable ...