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International PCAOB Inspections and Earnings management Transmission within Multinational Business Groups


Oesch, David; Urban, Felix (2019). International PCAOB Inspections and Earnings management Transmission within Multinational Business Groups. SSRN Electronic Journal 3277474, University of Zurich.

Abstract

Does the impact of international Public Company Accounting Oversight Board (PCAOB) inspections extend beyond country borders of inspected auditors? We investigate this question by examining multinational business groups. Following initial PCAOB inspections of accounting firms auditing foreign U.S.-listed global ultimate owners, our findings indicate that their international subsidiaries decrease earnings management. Research design choices such as the comparison of treated observations with same country-industry-year control observations and a fixed effects structure that controls for country, industry, year, and group characteristics mitigate concerns of omitted variables. Our paper provides evidence for benefits of international PCAOB inspections over and above the previously documented effects for firms located in the countries of the inspected auditors.

Abstract

Does the impact of international Public Company Accounting Oversight Board (PCAOB) inspections extend beyond country borders of inspected auditors? We investigate this question by examining multinational business groups. Following initial PCAOB inspections of accounting firms auditing foreign U.S.-listed global ultimate owners, our findings indicate that their international subsidiaries decrease earnings management. Research design choices such as the comparison of treated observations with same country-industry-year control observations and a fixed effects structure that controls for country, industry, year, and group characteristics mitigate concerns of omitted variables. Our paper provides evidence for benefits of international PCAOB inspections over and above the previously documented effects for firms located in the countries of the inspected auditors.

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Business Administration
Dewey Decimal Classification:330 Economics
Language:English
Date:28 May 2019
Deposited On:30 Aug 2019 07:15
Last Modified:04 Feb 2020 15:55
Series Name:SSRN Electronic Journal
Number of Pages:53
ISSN:1556-5068
OA Status:Green
Free access at:Publisher DOI. An embargo period may apply.
Publisher DOI:https://doi.org/10.2139/ssrn.3277474
Other Identification Number:merlin-id:18111

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