 Audit firm political connections and PCAOB inspection reportsW. Robert Knechel and Hyun Jong Park Accounting, Organizations and Society, 2022, vol. 100, issue C Abstract: We examine the effect of audit firm political connections on the harshness of Public Company Accounting Oversight Board (PCAOB) inspection reports. Relying on Regulatory Capture Theory and Motivated Reasoning Theory, we show audit firm political connections, as measured through PAC contributions, are negatively associated with the harshness of Part I reports. Our results are robust to instrumentation and are not due to movements of personnel between the PCAOB and audit firms or improvements in a firm's audit quality. In supplementary tests, we show the negative relation is stronger when we consider the directed nature of PAC contributions to members of Congress who exercise SEC oversight and robust to alternative measures. Finally, we consider the harshness of Part II inspection reports and find no association with political connections. Collectively, our results suggest audit firm political connections induce favorable influence over Part I findings of PCAOB inspection reports. Keywords: Political connections; PCAOB; Audit regulation; Auditor inspections (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:aosoci:v:100:y:2022:i:c:s0361368222000022 DOI: 10.1016/j.aos.2022.101335 Access Statistics for this article Accounting, Organizations and Society is currently edited by Christopher Chapman More articles in Accounting, Organizations and Society from Elsevier |
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