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

Continuous Trace \u3cem\u3eC\u3c/em\u3e*-Algebras, Gauge Groups and Rationalization

Let ζ be an n-dimensional complex matrix bundle over a compact metric space X and let Aζ denote the C*-algebra of sections of this bundle. We determine the rational homotopy type as an H-space of UAζ, the group of unitaries of Aζ. The answer turns out to be independent of the bundle ζ and depends only upon n and the rational cohomology of X. We prove analogous results for the gauge group and the projective gauge group of a principal bundle over a compact metric space X

Geometric phases and Wannier functions of Bloch electrons in 1-dimension

We present a formal expression for Wannier functions of composite bands of 1-D Bloch electrons in terms of parallel-transported Bloch functions and their non-Abelian geometric phases. Spatial decay properties of these Wannier functions are studied in the case of simple bands of 1-D model insulator and metal. Within first-principles density functional theory, we illustrate the formalism through the construction of Wannier functions of polyethylene and polyacetylene.Comment: 4 pages, 4 figure

Non-Emergency Medical Transportation Needs of Middle-Aged and Older Adults: A Rural-Urban Comparison in Delaware, USA.

Background: Older adults in rural areas have unique transportation barriers to accessing medical care, which include a lack of mass transit options and considerable distances to health-related services. This study contrasts non-emergency medical transportation (NEMT) service utilization patterns and associated costs for Medicaid middle-aged and older adults in rural versus urban areas. Methods: Data were analyzed from 39,194 NEMT users of LogistiCare-brokered services in Delaware residing in rural (68.3%) and urban (30.9%) areas. Multivariable logistic analyses compared trip characteristics by rurality designation. Results: Rural (37.2%) and urban (41.2%) participants used services more frequently for dialysis than for any other medical concern. Older age and personal accompaniment were more common and wheel chair use was less common for rural trips. The mean cost per trip was greater for rural users (difference of $2910 per trip), which was attributed to the greater distance per trip in rural areas. Conclusions: Among a sample who were eligible for subsidized NEMT and who utilized this service, rural trips tended to be longer and, therefore, higher in cost. Over 50% of trips were made for dialysis highlighting the need to address prevention and, potentially, health service improvements for rural dialysis patients

Smooth tail index estimation

Both parametric distribution functions appearing in extreme value theory - the generalized extreme value distribution and the generalized Pareto distribution - have log-concave densities if the extreme value index gamma is in [-1,0]. Replacing the order statistics in tail index estimators by their corresponding quantiles from the distribution function that is based on the estimated log-concave density leads to novel smooth quantile and tail index estimators. These new estimators aim at estimating the tail index especially in small samples. Acting as a smoother of the empirical distribution function, the log-concave distribution function estimator reduces estimation variability to a much greater extent than it introduces bias. As a consequence, Monte Carlo simulations demonstrate that the smoothed version of the estimators are well superior to their non-smoothed counterparts, in terms of mean squared error.Comment: 17 pages, 5 figures. Slightly changed Pickand's estimator, added some more introduction and discussio

Quiet eye training improves small arms maritime marksmanship

Quiet eye training—teaching task-specific gaze control—has been consistently shown to optimize the acquisition of motor skills. The present study aimed to examine the potential benefits of a quiet eye training intervention in a simulated maritime marksmanship task that involved shooting fast approaching moving targets with a decommissioned general-purpose machine gun. Twenty participants were randomly assigned to a quiet eye trained (QET) or technical trained (TT) group and completed 2 baseline, 20 training, and 2 retention trials on the moving-target task. Compared to their TT counterparts, the QET group displayed more effective gaze control (longer quiet eye durations and greater target locking) and more accurate performance (smaller radial error of both the initial shot and average of all shots) at retention. These findings highlight the potential for quiet eye training to be used to support the training of marksmanship skills in military settings