Indirect accountability of political appointees

This paper explores the indirect accountability of political appointees. The appointee’s quality is uncertain, and voters hold the politician accountable for the appointee’s performance. The politician has better information about the appointee than voters do, but electoral concerns induce the politician to make inefficient retention decisions. Specifically, there is over-retention of appointees relative to the social optimum. If the quality of candidates for appointment is low, then improving the pool of candidates can help reduce distortions and, in fact, it is in the interest of the politician to do so. I also show that more public information about the appointee reduces over-retention.

Releasing Earnings when the Audit is Less Complete: Implications for Audit Quality and the Auditor/Client Relationship

This study examines the effect of audit completeness at the annual earnings announcement date on audit quality and auditor/client retention decisions. The vast majority of companies now release earnings before the year-end audit is complete while, historically, companies would release earnings on or after the date of audit completion. Management's decision to release earnings when the audit is less complete can adversely impact audit quality and has negative implications for the overall auditor/client dynamic. We find that audits that are less complete at the earnings announcement date are associated with a higher likelihood of financial statement misstatements in audit areas that are typically performed towards the end of audit fieldwork. We also find a higher likelihood of auditor turnover during the following year. Taken together, the results suggest lower financial reporting/audit quality and higher auditor turnover for companies that release earnings when the audit is less complete.

It Is Not About the Money

This chapter will discuss the motivation of remote adjunct faculty members by utilizing the theoretical framework of self-determination theory. This will assist institutions in understanding why these faculty members teach, and understanding their motivation will assist institutions in recruiting, hiring, developing, and retaining qualified remote adjunct faculty members. As online programs in higher education continue to grow, there is a persistent increase in the usage of remote adjunct faculty. If an organization has strong, qualified adjunct faculty members but does not take care of them, the adjunct faculty member will go elsewhere to teach. People typically make job decisions based on money, but job retention decisions typically rest on autonomy and culture. With the growth in the number of adjunct faculty members, universities may be challenged to find qualified instructors, which makes retention even more critical.

Stock Price Crashes and Auditors’ Client-Retention Decisions

This study examines auditor resignations around a client firm’s stock price crash. Overall, the study suggests that a firm’s crash risk is one of the key factors influencing auditors’ client-retention decisions. A stock price crash increases the likelihood of lawsuits and financial restatements in the future. After controlling for risk factors that contribute to resignation decisions, I document a positive association between auditor resignations and stock price crashes. Further findings indicate that auditor size affects auditor–client relationship decisions before a crash occurs: Big auditors tend to resign more often from client firms with high crash risk compared with smaller auditors. However, auditor size becomes irrelevant once a crash occurs, as the client firms then become risky clients to both large and small auditors. This study therefore provides evidence that auditors of different sizes face different incentives to alter their relationship prior to a stock price crash and that these incentives change following a crash.

Variation among Copies of Titles Catalogued as Identical Should Inform Retention Decisions

A Review of: Teper, J. H. (2019). Considering “sameness” of monographic holdings in shared print retention decisions. Library Resources & Technical Services, 63(1), 29-45. https://doi.org/10.5860/lrts.63n1.29 Abstract Objective – To investigate the degree to which books catalogued using the same bibliographic record differ and to consider the implications of these differences for cooperative monographic print retention programs. Design – Book condition survey. Setting – Academic library consortium in the United States of America. Subjects – 47 monographic titles, publication years 1851-1922, held by all consortium members and catalogued using the same respective OCLC record number. 625 out of a possible 705 circulating copies of these titles were available for item-level analysis via interlibrary loan. Methods – Book condition surveys were completed for all items and the resulting sets of assessment data points were analyzed to reveal trends. Main Results – 3.4% of items analyzed exhibited cataloguing errors (i.e., were catalogued using the wrong OCLC records), 56.8% retained their original bindings, 17.8% were marked to show previous ownership, 95.7% were complete with no missing content, 9.8% had no damage, and 18.9% had received identifiable preservation action. Conclusion – Books catalogued using the same OCLC record demonstrated many differences when compared at the item level. These differences are important in light of shared print retention programs and highlight a need for inquiry into the number of copies that should be retained to minimize the loss of uniqueness in print materials.

Client and audit partner ethnicity and auditor-client alignment

PurposeThe purpose of this study is to examine the role of ethnic similarity in the audit partner–client manager relationship and its impact on auditor selection and retention decisions.Design/methodology/approachThe authors use name matching analysis to infer ethnicity of audit partners and client managers in the US nonprofit reporting environment. The authors examine the degree of ethnic similarity (co-ethnicity) between the two parties and model auditor selection and retention decisions as a function of co-ethnicity. The authors also model reporting attributes as a function of co-ethnicity.FindingsThe authors find that the ethnic similarity between the client manager and their external audit partner is a significant determinant of auditor-client alignment. Specifically, the authors find that clients are more likely to select and retain an audit partner who is ethnically similar to the client manager. The authors find that co-ethnicity is associated with a lowered propensity to issue a going concern opinion to a financially distressed client and an increased occurrence of underreporting of fundraising and administrative expenses.Research limitations/implicationsTaken together, the evidence suggests that ethnic diversity (the opposite of co-ethnicity) in the auditor-client relationship is associated with higher audit quality. These findings are relevant to client managers, audit committees and public accounting firms as they make auditor selection and reporting decisions.Originality/valuePrior studies have found that co-ethnicity influences the formation and future success of various business partnerships. The auditor-client relationship is a unique setting within the business environment where the two parties must balance their desire to maintain a close relationship with their need to maintain independence. The study is the first to examine the role of ethnicity in the auditor-client relationship.