NDLI: Auditor Style and Common Disclosure Deficiencies: Evidence from SEC Comment Letters

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Auditor Style and Common Disclosure Deficiencies: Evidence from SEC Comment Letters

Content Provider	Scilit
Author	Baugh, Matthew Schmardebeck, Roy
Copyright Year	2019
Description	Journal: SSRN Electronic Journal Auditor style results from policies and procedures that centralize decision-making within an audit firm. This style increases financial statement comparability, implicitly making financial statements more useful to outsiders. A potential hazard of centralized decision-making is the propagation of decision errors throughout the audit firm. We predict and find that auditor style is associated with a set of common disclosure deficiencies among audit clientele as measured by the similarity of comment letters from the Securities and Exchange Commission’s filing review process. Clients converge in both style and disclosure deficiencies as auditor tenure increases. Further, after changing auditors, clients assume the style and disclosure deficiencies of the subsequent auditor. These results provide the first evidence that auditor style, while potentially beneficial to users of the financial statements, also has potential costs.
Related Links	https://mospace.umsystem.edu/xmlui/bitstream/10355/63609/1/research.pdf https://papers.ssrn.com/sol3/Delivery.cfm?abstractid=3368511
ISSN	10914358
e-ISSN	15565068
DOI	10.2139/ssrn.3368511
Journal	SSRN Electronic Journal
Language	English
Publisher	Elsevier BV
Publisher Date	2019-03-01
Access Restriction	Open
Subject Keyword	Journal: SSRN Electronic Journal Audit Quality Auditor Style Financial Statement Comparability Sec Comment Letters
Content Type	Text
Subject	Public Health, Environmental and Occupational Health Psychiatry and Mental Health

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