Please use this identifier to cite or link to this item: http://hdl.handle.net/10125/70532

Does Audit Regulation Improve the Underlying Information Used by Managers? Evidence from PCAOB Inspection Access and Management Forecast Accuracy

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Title:Does Audit Regulation Improve the Underlying Information Used by Managers? Evidence from PCAOB Inspection Access and Management Forecast Accuracy
Authors:Brant Christensen
Lijun Lei
Qing Shu
Wayne Thomas
Keywords:Pcaob International Inspection
Voluntary Disclosure
Management Forecast Accuracy
Audit Regulation
Date Issued:15 Aug 2020
Abstract:Survey evidence and academic research raises the possibility that audit regulation can impact not only the information contained in external financial reports but also the internal information used by management (International Federation of Accountants, 2018; Libby, Rennekamp, & Seybert, 2015). We investigate this issue by examining the improvement in management forecast accuracy around initiation of the Public Company Accounting Oversight Board's (PCAOB) international inspection program. Consistent with managers having improved information, we find that managers issue more accurate forecasts following PCAOB inspection access. Further, this improvement in forecast accuracy is more pronounced in countries with stronger legal institutions, supporting the intended effect of legal institutions to facilitate enacted regulations. Our study uses a multi-country setting to provide evidence that audit regulation benefits an important internal stakeholder—managers.
URI:http://hdl.handle.net/10125/70532
Appears in Collections: 01 Auditing


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