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Audit firm disclosure, governance and earning quality: an empirical analysis

Audit firm disclosure, governance and earning quality: an empirical analysis

Russo, Antonella, Coronella, Stefano and Risaliti, Gianluca (2017) Audit firm disclosure, governance and earning quality: an empirical analysis. [Working Paper] (Unpublished)

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Abstract

In January 2010 the FRC and Institute of Chartered Accountants in England and Wales (ICAEW) published the Audit Firm Governance Code.

The Audit Firm Governance Code (the Code) is intended to assist in promoting continuing confidence and choice in the market for the audit firms of listed companies and should be relevant to everyone who sees audit as playing a vital role in a market economy.

The efforts of the regulators on audit disclosure are based on the sizeable body of literature that affirms the significant role of the corporate governance for the market transparency and for the high quality of the voluntary disclosure.

This study looks at whether or not, and if so, Transparency report of the audit firms reveals audit quality factors as indicated in a regulatory efforts on audit quality and investigate the impact of Audit Firm Governance on transparency report disclosure practices over a three-year period in UK, Ireland, Spain and Italy.

These countries implemented the transparency report, required in the EU’s Statutory Audit Directive since 2008 but we prefer to start with our analysis from 2011 to 2013 in order to capture the effect of Audit Firm Governance Code on audit disclosure.

For the countries chosen we collect the data from transparency reports of the BIG 4 (DELOITTE, PWC, ERNST&YOUNG, KPMG) and of 4 non BIG 4 (GRANT THORNTON, BDO, BAKERTILLY, MAZARS,) that cover the 99% of the audited public entities capital market.

The results show that the effect of the BIG4 on audit quality disclosure is very significant and creates an homogenous disclosure in Transparency report so that the model doesn't present correlation with the UK even if only in this country we have the application of the Audit firm Governance Code.

Item Type: Working Paper
Uncontrolled Keywords: Audit Firm Governance, Audit Quality, Earnings Quality, Transparency Report
Subjects: H Social Sciences > HF Commerce > HF5601 Accounting
Faculty / Department / Research Group: Faculty of Business
Faculty of Business > Department of Accounting & Finance
Last Modified: 10 May 2017 15:58
Selected for GREAT 2016: None
Selected for GREAT 2017: GREAT b
Selected for GREAT 2018: None
URI: http://gala.gre.ac.uk/id/eprint/16807

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