How Do Auditor Fees Affect Accruals Quality? Additional Evidence

Corporate disclosures of auditor fees (beginning in February 2001) caused considerable concern among regulators and investors about auditor independence because they revealed that nonaudit fees were a substantial proportion of total auditor fees. However, in 2003 the Securities and Exchange Commission (SEC) introduced revised disclosure requirements, specifying a broader definition of audit fees, and additional fee categories (SEC 2003). About 31 percent of our sample firms adopted the new rules in advance of the required date. We investigate the pattern of early adoption of the new fee disclosure rules by companies. Our results indicate that companies with greater nonaudit fee ratios during the prior year, companies that could show a greater decline in nonaudit fee ratios due to reclassification under SEC (2003), and companies that had greater audit-related fees after the reclassification were likely to adopt the new rules early. We conjecture that companies that had the most to gain from reclassifying fees—possibly by reducing negative investor perceptions about nonaudit services—adopted the new rules earlier than required.

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Audit quality, accruals quality and the cost of equity in an emerging market: Evidence from Vietnam

International Review of Financial Analysis ◽

10.1016/j.irfa.2021.101798 ◽

2021 ◽

pp. 101798

Author(s):

Ha Thi Thu Le ◽

Ha Giang Tran ◽

Xuan Vinh Vo

Keyword(s):

Audit Quality ◽

Emerging Market ◽

Cost Of Equity ◽

Accruals Quality ◽

The Cost

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Information risk, stock returns, and asset pricing: Evidence from China

Accounting Research Journal ◽

10.1108/arj-04-2015-0057 ◽

2017 ◽

Vol 30 (4) ◽

pp. 379-394 ◽

Cited By ~ 1

Author(s):

Raheel Safdar ◽

Chen Yan

Keyword(s):

Stock Returns ◽

Factor Model ◽

Empirical Literature ◽

Firm Level ◽

Cross Sectional ◽

Market Pricing ◽

Content Type ◽

Information Risk ◽

Accruals Quality ◽

Three Factor

Purpose This study aims to investigate information risk in relation to stock returns of a firm and whether information risk is priced in China. Design/methodology/approach The authors used accruals quality (AQ) as their measure of information risk and performed Fama-Macbeth regressions to investigate association of AQ with future realized stock returns. Moreover, two-stage cross-sectional regression analysis was performed, both at firm level and at portfolio level, to test if the AQ factor is priced in China in addition to existing factors in the Fama French three-factor model. Findings The authors found poor AQ being associated with higher future realized stock returns. Moreover, they found evidence of market pricing of AQ in addition to existing factors in the Fama French three-factor model. Further, subsample analysis revealed that investors value AQ more in non-state owned enterprises than in state owned enterprises. Research limitations/implications The study sample comprises A-shares only and the generalization of the findings is limited by the peculiar institutional and economic setup in China. Originality/value This study contributes to market-based accounting literature by providing further insight into how and if investors value information risk, and it seeks to fill gap in empirical literature by providing evidence from the Chinese capital market.

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Accruals quality and corporate cash holdings

Accounting and Finance ◽

10.1111/j.1467-629x.2008.00276.x ◽

2009 ◽

Vol 49 (1) ◽

pp. 95-115 ◽

Cited By ~ 36

Author(s):

Pedro J. García-Teruel ◽

Pedro Martínez-Solano ◽

Juan Pedro Sánchez-Ballesta

Keyword(s):

Cash Holdings ◽

Accruals Quality ◽

Corporate Cash Holdings

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