Bi-Objective Optimization Problems—A Game Theory Perspective to Improve Process and Product

Publisher Copyright: © 2022 by the authors. This research received no external funding.Cost-effective manufacturing processes or products are no longer the only requirements for business sustainability. An approach based on Game Theory is suggested to find solutions for bi-objective problems. In particular, Stackelberg’s technique is employed and complemented with the Factors Scaling tool to help the users in defining its strategy for optimizing process and product quality characteristics. No subjective information (shape factors, weights, and/or any other preference information) is required from the users, and basic computational background is enough for implementing it. Two case studies provide evidence that the suggested easy-to-use approach can yield nondominated solutions from a small number of Leader–Follower cycles, what reinforces its usefulness for bi-objective optimization problems.publishersversionpublishe

Retain or Rotate: Outcomes of Frequent Auditor Switching

Regulators continue to debate the effectiveness of mandatory auditor rotation versus mandatory auditor retention in improving audit quality. Recent regulation in the European Union mandates auditor rotation, but if companies choose a more-lenient auditor with each switch, frequent switching could impair audit quality. I examine whether more-frequent switching leads to an increase in aggressive reporting and evaluate its effect on audit quality and audit attention. I find that audit quality decreases as the number of switches increases, with the results being driven mainly by switches between non-Big 4 audit firms. I also find that frequently switching between non-Big 4 auditors is accompanied by higher fees, longer audit opinion delays, and a higher probability of filing late. In contrast, frequent switching among Big 4 firms is associated with lower fees, suggesting the presence of price cutting. In additional analyses, I find no evidence of opinion shopping among non-Big 4 firms but find that opinion shopping may be occurring among Big 4 firms to prevent internal control material weakness opinions. Collectively, my findings suggest that mandated auditor rotation may negatively impact audit market efficiency