The Interrelation between Audit Quality and Managerial Reporting Choices and Its Effects on Financial Reporting Quality

Two distinct lines of research have been dedicated to empirically testing how financial reporting quality (measured as the earnings response coefficient or ERC) is associated with management's choice of reporting bias and with audit quality. However, researchers have yet to consider how ERCs are affected by either the auditor's reaction to changes in the manager's reporting bias or the manager's reaction to changes in audit quality. Our study provides theoretical guidance on these interrelations and how changes in the manager's or the auditor's incentives affect both reporting bias and audit quality. Specifically, when the manager's cost (benefit) of reporting bias increases (decreases), we find that expected bias decreases, inducing the auditor to react by reducing audit quality. Because we also find that the association between expected audit quality and ERCs is always positive, changes in managerial incentives for biased reporting lead to a positive association between ERCs and expected reporting bias. When the cost of auditing decreases or the cost of auditor liability increases, we find that expected audit quality increases, inducing the manager to react by decreasing reporting bias. In this case, changes in the costs of audit quality lead to a negative association between ERCs and expected reporting bias. Finally, we demonstrate the impact of our theoretical findings by focusing on the empirical observations documented in the extant literature on managerial ownership and accounting expertise on the audit committee. In light of our framework, we provide new interpretations of these empirical observations and new predictions for future research

The Effects of Auditor Tenure on Fraud and Its Detection

We examine the strategic effects of auditor tenure on the auditor's testing strategy and the manager's inclination to commit fraud. Most empirical studies conclude that longer tenure improves audit quality. Proponents of restricting tenure argue that longer tenure impairs auditor independence and a "fresh look" from a new auditor results in higher audit quality. Validating this argument requires testing whether the observed difference in audit quality between a continuing auditor and a change in auditors is less than the theoretically expected difference in audit quality without impairment. Our findings provide the guidance necessary for developing such tests. Our results show that audit risk (the probability that fraud exists and goes undetected) is lower in both periods for the continuing auditor than with a change in auditors. More importantly, we show that across both periods, expected undetected fraud is lower for the continuing auditor than with a change in auditors

Stochastic Failure Models Based Upon Distribution of Stress Peaks

This paper summarizes the development of three stress-strength models of reliability in which the stress producing mechanism is a one dimensional random process evolving in time. The general reliability functions are given along with examples of special cases. The problem of modeling randomly deteriorating strength is briefly discussed and one model is discussed from the point of view of time series analysis

Deformed Brueckner-Hartree-Fock calculations

The renormalized Brueckner-Hartree-Fock (RBHF) theory for many-body nuclear systems is generalized to permit calculations for intrinsic states having permanent deformation. Both Hartree-Fock and Brueckner self-consistencies are satisfied, and details of the numerical techniques are discussed. The Hamada-Johnston interaction is used in a study of deformations, binding, size, and separation energies for several nuclei. Electromagnetic transition rates, moments, and electron scattering form factors are calculated using nuclear wave functions obtained by angular momentum projection. Comparison is made to experiment as well as to predictions of ordinary and density-dependent Hartree-Fock Theory

Short-range correlations in carbon-12, oxygen-16, and neon-20: Intrinsic properties

The Brueckner-Hartree-Fock (BHF) method has been applied to nuclei whose intrinsic structure is nonspherical. Reaction matrix elements were calculated as functions of starting energy for the Hamada-Johnston interaction using the Pauli operator appropriate to O-16 and a shifted oscillator spectrum for virtual excited states. Binding energies, single particle energies, radii, and shape deformations of the intrinsic state, in ordinary as well as renormalized BHF, are discussed and compared with previous HF studies and with experiment when possible. Results are presented for C-12, 0-16 and Ne-20. It is found that the binding energies and radii are too small, but that separation energies are well reproduced when the renormalized theory is used

Upland Cotton Variety Tests 1961

This item is part of the Agricultural Experiment Station archive. It was digitized from a physical copy provided by the University Libraries at the University of Arizona. For more information, please email CALS Publications at [email protected]

Prototype construction of a compiler for network analysis feasibility study

Feasibility of unified compilers for network analysi

A review of residual stress analysis using thermoelastic techniques

Thermoelastic Stress Analysis (TSA) is a full-field technique for experimental stress analysis that is based on infra-red thermography. The technique has proved to be extremely effective for studying elastic stress fields and is now well established. It is based on the measurement of the temperature change that occurs as a result of a stress change. As residual stress is essentially a mean stress it is accepted that the linear form of the TSA relationship cannot be used to evaluate residual stresses. However, there are situations where this linear relationship is not valid or departures in material properties due to manufacturing procedures have enabled evaluations of residual stresses. The purpose of this paper is to review the current status of using a TSA based approach for the evaluation of residual stresses and to provide some examples of where promising results have been obtained

Exploring Halo Substructure with Giant Stars: The Dynamics and Metallicity of the Dwarf Spheroidal in Bootes

We report the results of a spectroscopic study of the Bootes (Boo) dwarf spheroidal (dSph) galaxy carried out with the WIYN telescope and the Hydra multifiber spectrograph. Radial velocities have been measured for 58 Boo candidate stars selected to have magnitudes and colors consistent with its red and asymptotic giant branches. Within the 13' half-light radius, seven members of Boo yield a systemic velocity of V_r=95.6+-3.4 km/s and a velocity dispersion of 6.6+-2.3 km/s. This implies a mass on the order of 1 x 10^7 M_sun, similar to the inferred masses of other Galactic dSphs. Adopting a total Boo luminosity of L=1.8 x 10^4 L_sun to 8.6 x 10^4 L_sun implies M/L ~ 610 to 130, making Boo, the most distorted known Milky Way dwarf galaxy, potentially also the darkest. From the spectra of Boo member stars we estimate its metallicity to be [Fe/H] ~ -2.5, which would make it the most metal poor dSph known to date.Comment: Accepted for publication in ApJ Letter