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

Why Toyota And Honda Topped The 2002 J.D. Power Quality Study, Susan Lightle, Kenneth Yale Rosenzweig, John Talbott Dec 2003

Why Toyota And Honda Topped The 2002 J.D. Power Quality Study, Susan Lightle, Kenneth Yale Rosenzweig, John Talbott

Accounting Faculty Publications

Toyota again topped the annual J. D. Power and Associates quality study released in late May of 2002. Toyota scored the highest mark ever with l 07 defects per l 00 vehicles, while Honda came in second with 113 defects. The study was based on responses of approximately 65,000 new car owners queried during their first 90-days of ownership.

These results do not surprise us, as we have been fortunate to make numerous sojourns to the Toyota plant in Georgetown, Kentucky, and observe the manufacturing processes. These trips were normally facilitated by a former Japanese student of ours, Minako ...


Audit Committee Independence And Disclosure: Choice For Financially Distressed Firms, Joseph Carcello, Terry Neal Sep 2003

Audit Committee Independence And Disclosure: Choice For Financially Distressed Firms, Joseph Carcello, Terry Neal

Joseph V. Carcello

This study examines the relation between audit committee independence and disclosure choice for financially distressed US firms. The tenor of both the financial statement notes and Management Discussion and Analysis (MD&A) is considered. For firms experiencing financial distress, there is a significant positive relation between the percentage of affiliated directors on the audit committee and the optimism of the going-concern discussion in both the notes and the MD&A. These results add to the growing body of literature documenting a relation between audit committee independence and financial reporting quality.


Shareholder Value And Auditor Independence, William W. Bratton Jan 2003

Shareholder Value And Auditor Independence, William W. Bratton

Faculty Scholarship at Penn Law

This Article questions the practice of framing problems concerning auditors’ professional responsibility inside a principal-agent paradigm. If professional independence is to be achieved, auditors cannot be enmeshed in agency relationships with the shareholders of their audit clients. As agents, the auditors by definition become subject to the principal’s control and cannot act independently. For the same reason, auditors’ duties should be neither articulated in the framework of corporate law fiduciary duty, nor conceived relationally at all. These assertions follow from an inquiry into the operative notion of the shareholder-beneficiary. The Article unpacks the notion of the shareholder and tells ...


Enron, Sarbanes-Oxley And Accounting: Rules Versus Principles Versus Rents, William W. Bratton Jan 2003

Enron, Sarbanes-Oxley And Accounting: Rules Versus Principles Versus Rents, William W. Bratton

Faculty Scholarship at Penn Law

No abstract provided.


Audit Committee Characteristics And Auditor Dismissals Following “New” Going-Concern Reports, Joseph Carcello, Terry Neal Dec 2002

Audit Committee Characteristics And Auditor Dismissals Following “New” Going-Concern Reports, Joseph Carcello, Terry Neal

Joseph V. Carcello

One important role of audit committees is to protect external auditors from dismissal following the issuance of an unfavorable report. We examine auditor dismissals following new going-concern reports that Big 6 firms issued between 1988 and 1999. Our findings suggest that audit committees with greater independence, greater governance expertise, and lower stockholdings are more effective in shielding auditors from dismissal after the issuance of new going-concern reports. In addition, we find that the relation between audit committee independence and auditor protection from dismissal has grown stronger over time. Finally, independent audit committee members experience a significant increase in turnover rate ...


Auditor Reporting Behavior When Gaas Lack Specificity: The Case Of Sas No. 59, Joseph Carcello, Dana Hermanson, Terry Neal Dec 2002

Auditor Reporting Behavior When Gaas Lack Specificity: The Case Of Sas No. 59, Joseph Carcello, Dana Hermanson, Terry Neal

Joseph V. Carcello

Statement on Auditing Standards No. 59 did not clearly specify the language to be used in the going concern (GC) report. Subsequent standards prohibited GC reports that failed to use the terms “substantial doubt” and “going concern” and that used conditional language. We find that: (1) most “subsequently prohibited” (SP) GC reports (those that fail to use the terms “substantial doubt” and “going concern” or that use conditional language) contain conditional language and refer to financing and capital issues; (2) practicing CPAs and regulators have concerns about clients pressuring auditors to soften the wording of GC reports, but also recognize ...