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Abstract:
In this paper, we investigate the timeliness of and stock price reaction to a sample of Form 8-K reports filed in 1993 with the Securities and Exchange Commission (SEC). Under current SEC regulations, a Form 8-K must be filed within 5 to 15 days after the occurrence of certain events, such as a bankruptcy filing or an auditor change, as well as after any material development that a registrant believes is relevant to its investors. The SEC?s presumption is that the Form 8-K is relevant to investors; in particular, the report "plays a critical role in the periodic reporting system, which is intended to provide investors with a continuous stream of corporate information" (SEC Accounting Series Release No. 306 [1982]). This function has assumed greater importance in light of proposals made by the SEC to expand the number of required disclosures in the Form 8-K and to reduce the allowed time for filing. Specifically, in an attempt to provide more consistent and timely disclosure by all public companies, the SEC proposes that earnings and selected other financial data be released through an 8-K within 30 days after the end of each fiscal quarter (60 days after fiscal year-end). Form 8-K filing deadlines would be shortened; disclosures currently due in 15 calendar days would be accelerated to 5 business days, and those due in 5 business days would be reduced to 1 business day (SEC [1998]).

Abstract:
This paper examines audit report lags and earnings announcement lags for a sample of firms that switched auditors. We investigate whether audit report and earnings announcement lags are associated with the timing of auditor changes in relation to firms' fiscal year-ends. It is hypothesized that firms which replace their auditor early (late) in the fiscal year do so for positive (negative) reasons and experience shorter (longer) reporting lags. Conflicts over reporting issues can be difficult to resolve and consequently lead to reporting delays. In other cases, clients may be more concerned about adhering to customary reporting practices or improving reporting timeliness. These are likely to be considerations in auditor realignment decisions and are predictably reflected in the timing of the auditor change. The empirical findings for both audit report and earnings announcement lags are consistent with the hypotheses. Despite the increase in reporting lags for late switchers, we observe a higher incidence of switching in the fourth quarter than in any other quarter. Additionally, we detect a higher percentage of losses and modified opinions for late switchers in the year of the auditor change, which is consistent with the negative circumstances hypothesis. However, we find no evidence of a significant market reaction to announcements of early or late auditor changes. Given the importance of timely reporting, the findings suggest that the timing of an auditor change can convey distinct benefits or costs to switching firms, as measured by its effect on reporting lags. These findings also suggest that additional monitoring of auditor changes occurring around firms' fiscal year-ends can be beneficial because of their potentially negative antecedents and consequences.

Abstract:
This paper identifies widespread noncompliance with SEC regulations requiring prompt disclosure of auditor changes and investigates whether late filers and their auditors simply lack SEC expertise or have other reasons to delay reporting the auditor change. Some direct evidence in support of a specific Big-6 "quality" differential is provided. Most notably, the time to file the Form 8-K and the frequency of late filings increase significantly when non-Big 6 auditors are involved. Additionally, shorter filing delays and gradually higher compliance rates are detected after 1989 when the SEC reduced the Form 8-K filing time and the AICPA instituted a requirement for auditors to notify the Commission independently when a change occurs. We also find that late filers are more likely to be smaller and financially distressed, and less likely to issue securities following the auditor change, suggesting that compliance is affected by factors other than competency.