Wards Finance Seminar Series. Does Audit Office Geographic Location Affect Audit Quality? Evidence from SOX 404 (b) Internal Control Audit Mandate
Published: 10 March 2023
17 March. Professor Chun-Keung Hoi, Rochester Institute of Technology
Professor Chun-Keung Hoi, Rochester Institute of Technology
"Does Audit Office Geographic Location Affect Audit Quality? Evidence from SOX 404 (b) Internal Control Audit Mandate"
Friday, 17 March. 14:00
Wards Library. Main Building
Abstract
We define a big-city auditor as an auditor from any audit offices located in one of the top-10 consolidated metropolitan statistical areas in the U.S. based on population size reported in the 2000 Census. We find that firms with a big-city auditor experience significant increases in internal control weakness disclosures and marked reductions in abnormal accruals after the internal control audit mandate of SOX 404 (b) relative to firms with auditors from offices located in other areas. These post-mandate audit quality improvements are robust in tests for omitted location-specific variables and in regressions with firms that have neither moved corporate headquarters nor switched auditor offices. The post-mandate audit fee surge is 5.2% higher for firms with big-city auditors than for firms with other auditors. We conclude that office geographic location affects auditors’ ability to provide high-quality audits.
Bio
Hoi, Chun-Keung is a professor of finance in the Saunders College of Business., His colleagues and students call him Stan. His current research interests include tax avoidance, social capital, social, responsibility, and corporate governance. He has published in leading academic, journals across business disciplines including finance, accounting, and, management such as Journal of Finance, Journal of Financial Economics, Journal, of Financial and Quantitative Analysis, Financial Management, The Accounting, Review, Journal of Accounting Research, Journal of Business Ethics, Corporate, Governance: An International Review, and Communications of the ACM. , , His current teaching focuses on financial models and corporate finance. Stan, has received multiple awards for his teaching and service from the Saunders, College and from RIT. The awards from RIT include the Eisenhart Award for, Outstanding Teaching (2006-2007) and the Provost's Award for Excellence in, Mentoring (2013-2014).
For further information, please contact business-school-research@glasgow.ac.uk
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First published: 10 March 2023
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