| 1. |
- Alexeyeva, Irina
(författare)
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Board members' outside directorships and the demand for audit quality : Large sample evidence from private firms
- 2023
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Ingår i: Journal of Accounting, Auditing and Finance. - : Sage Publications. - 0148-558X .- 2160-4061.
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Tidskriftsartikel (refereegranskat)abstract
- Board members with multiple directorships develop reputational capital as decision experts. Prior studies based on public firms suggest that such directors would use higher quality auditors to improve the quality of financial reporting and, thereby, protect their reputational capital. This study is the first large-scale study that investigates whether multiple directorships influence auditor choice in the setting of private firms. The result indicates a significant positive association between the proportion of board members with outside directorships and audit quality. Furthermore, it shows that the propensity to hire a higher quality auditor is significantly influenced by directors’ network. Finally, the results indicate that the incentives to invest in higher quality auditors are largely influenced by the size of the companies in which board members have their outside directorships.
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| 2. |
- Ivanova, Mariya, et al.
(författare)
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The Effects of Board Interlocks With an Allegedly Fraudulent Company on Audit Fees
- 2023
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Ingår i: Journal of Accounting, Auditing and Finance. - : Sage. - 2160-4061 .- 0148-558X. ; 38:2, s. 271-301
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Tidskriftsartikel (refereegranskat)abstract
- Drawing on prior literature on audit fees, client reputation, and corporate governance, we posit that a material adverse event at a firm, such as a financial fraud allegation, leads to an increase in the audit fees of firms connected to the former by a board interlock. We propose two possible mechanisms to explain the upward pressure on audit fees: a client-side effect, where the client demands additional audit services, and an auditor-side effect, where the auditor raises its audit fees due to a perceived increase in audit engagement risk. The results indicate an average marginal increase of 12.86% in audit fees in the year following the public revelation of financial fraud. Additional analyses suggest that an auditor-side effect is in place, while we cannot find clear evidence supporting the client-side effect. Furthermore, we document that the positive effect on audit fees persists for up to at least 2 years after public disclosure of the event when the interlocked director serves as a member of the audit committee.
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| 3. |
- Pundrich, Gabriel, et al.
(författare)
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Corporate Bankruptcy and Directors' Reputation: An Empirical Analysis of the Effects on Public Debt Contracts
- 2023
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Ingår i: Journal of Accounting, Auditing and Finance. - : Sage. - 2160-4061 .- 0148-558X. ; 38:4, s. 777-803
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Tidskriftsartikel (refereegranskat)abstract
- This article investigates the link between board members' past professional experiences and the terms and conditions of the debt contracts of their current firms. In particular, we examine whether directors' past bankruptcy experience affects the pricing and nonpricing terms of public debt contracts. Using a sample of 8,142 bond issues in the United States in the period 1995 to 2015, we document higher credit spreads and smaller bond sizes for firms with such directors, suggesting that bondholders are concerned about past bankruptcy experience. Our results remain robust to different model specifications. This effect is moderated for bankruptcies that are likely driven by macroeconomic shocks such as the dotcom bubble and the global financial crisis. We also show that our findings are not explained by bond issuers with an elevated risk of default and seem instead to be driven by directors serving on key monitoring committees, indicating that prior bankruptcy experience raises concerns about the company's corporate governance. Finally, mediation analysis offers some evidence of a limited negative indirect effect of prior bankruptcy experience on the terms of debt contracts through the firm's financial and investment policies. Overall, our findings suggest that lenders incorporate information about past professional experiences of directors into public debt contracting.
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| 4. |
- Lundqvist, Sara
(författare)
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An Exploratory Study of Enterprise Risk Management Pillars of ERM
- 2014
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Ingår i: Journal of Accounting, Auditing & Finance. - 2160-4061. ; 29:3, s. 393-429
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Tidskriftsartikel (refereegranskat)abstract
- There is a general consensus that enterprise risk management’s (ERM) popularity has resulted from a response to pressure on organizations to holistically manage risk. Multiple frameworks for implementation of ERM contribute to an overall uncertainty regarding the essential components of ERM. This uncertainty carries forward to empirical studies of ERM where results regarding value creation are inconclusive. There exists no real consensus about what the principal components of ERM are; this has led to identification and measurement methods that are inconsistent. By using inconsistent indicators and measures of ERM implementation, it is impossible to compare “apples to apples” and arrive at conclusive and convincing results regarding ERM’s ability to create value. This is an exploratory study of ERM aimed at determining the integral components of ERM based on how firms actually implement ERM dimensions. The result is the identification of four discrete components, or pillars, of ERM implementation; two prerequisite components related to the general internal environment and control activities of the firm, one component identifying risk management activities of the firm and one component with the defining attributes of ERM implementation. All four components must be implemented to have well-implemented ERM, but only one separates ERM firms from non-ERM firms. The resulting four components challenge existing frameworks to adapt to better reflect how firms implement ERM and can have a valuable impact on identifying and measuring ERM, leading to more informative empirical studies on the value creating abilities of ERM.
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