I investigate the effect of requiring the audit engagement partner (EP) to sign the audit report on financial analysts’ information environment in the United Kingdom (U.K.). To control for the effect of confounding concurrent events, I use a control sample of firms listed in France, Germany, and the Netherlands that had already implemented the EP signature requirement at least 2 years prior to the adoption date in the U.K. I find that, relative to this control sample, U.K. firms experienced a significant increase in analyst following and a significant decrease in analysts’ absolute forecast errors and forecast dispersion from a 2-year pre- to 2-year post-signature period. The results are robust to a battery of sensitivity tests such as varying both pre- and post-signature windows and using different measurements of outcome variables. In general, my findings indicate that adopting the EP signature requirement leads to the improvement in analysts’ information environment in the U.K., and this improvement is partially influenced by an improvement in audit quality. These results provide timely ex-ante empirical evidence to the ongoing debate over whether passing a similar requirement in the U.S., proposed by the Public Company Accounting Oversight Board, benefits investors and other financial statement users.
Review of Quantitative Finance and Accounting – Springer Journals
Published: Aug 8, 2016
It’s your single place to instantly
discover and read the research
that matters to you.
Enjoy affordable access to
over 18 million articles from more than
15,000 peer-reviewed journals.
All for just $49/month
Query the DeepDyve database, plus search all of PubMed and Google Scholar seamlessly
Save any article or search result from DeepDyve, PubMed, and Google Scholar... all in one place.
Get unlimited, online access to over 18 million full-text articles from more than 15,000 scientific journals.
Read from thousands of the leading scholarly journals from SpringerNature, Elsevier, Wiley-Blackwell, Oxford University Press and more.
All the latest content is available, no embargo periods.
“Hi guys, I cannot tell you how much I love this resource. Incredible. I really believe you've hit the nail on the head with this site in regards to solving the research-purchase issue.”Daniel C.
“Whoa! It’s like Spotify but for academic articles.”@Phil_Robichaud
“I must say, @deepdyve is a fabulous solution to the independent researcher's problem of #access to #information.”@deepthiw
“My last article couldn't be possible without the platform @deepdyve that makes journal papers cheaper.”@JoseServera