Public Audit Oversight and Reporting Credibility: Evidence from the PCAOB Inspection Regime

Brandon Gipper, Christian Leuz and Mark Maffett

No 21530, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper studies the impact of public audit oversight on financial reporting credibility. We analyze changes in market responses to earnings news after public audit oversight is introduced, exploiting that the regime onset depends on fiscal year-ends, auditors, and the rollout of auditor inspections. We find that investors respond more strongly to earnings news following public audit oversight. Corroborating these findings, we find an increase in volume responses to 10-K filings after the new regime. Our results show that public audit oversight can enhance reporting credibility and that this credibility is priced in capital markets.

JEL-codes: G14 G18 G38 K22 M41 M42 M48 (search for similar items in EconPapers)
Date: 2015-09
New Economics Papers: this item is included in nep-acc and nep-law
Note: AP CF LE
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Citations: View citations in EconPapers (5)

Published as Brandon Gipper & Christian Leuz & Mark Maffett & Andrew Karolyi, 2020. "Public Oversight and Reporting Credibility: Evidence from the PCAOB Audit Inspection Regime," The Review of Financial Studies, vol 33(10), pages 4532-4579.

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