Abstract

http://ssrn.com/abstract=1283946
 
 

References (49)



 
 

Citations (23)



 


 



A New Measure of Accounting Quality*


Paul Hribar


University of Iowa - Henry B. Tippie College of Business

Todd D. Kravet


University of Connecticut - Department of Accounting

Ryan J. Wilson


University of Oregon - Lundquist College of Business

April 27, 2010


Abstract:     
This study examines an alternative approach to measuring accounting quality. Adopting a neoclassical view of the audit market, we argue that unexplained audit fees are a measure of accounting quality. We develop a comprehensive model of audit fee determinants to estimate unexplained audit fees. We use the framework developed by Cronbach and Meehl (1955) to examine the construct validity of our new measure. We find that our audit fee-based measure of quality correlates positively with other empirical measures of quality. We further show our measure is predictive of fraud, restatements, and SEC comment letters, even after controlling for other measures of accounting quality. Finally, we show that it is less associated with innate firm characteristics than measures based on realized earnings, making it a good candidate for studies examining the economic consequences of accounting quality.

Number of Pages in PDF File: 50

Keywords: Accounting Quality, Restatements, Fraud, Audit Fees

JEL Classification: M41, M43, M49, G12

working papers series





Download This Paper

Date posted: October 14, 2008 ; Last revised: June 28, 2010

Suggested Citation

Hribar, Paul and Kravet, Todd D. and Wilson, Ryan J., A New Measure of Accounting Quality* (April 27, 2010). Available at SSRN: http://ssrn.com/abstract=1283946 or http://dx.doi.org/10.2139/ssrn.1283946

Contact Information

Paul Hribar (Contact Author)
University of Iowa - Henry B. Tippie College of Business ( email )
Dept. of Accounting
Iowa City, IA 52242-1000
United States
319-335-1008 (Phone)
Todd D. Kravet
University of Connecticut - Department of Accounting ( email )
School of Business
Storrs, CT 06269-2041
United States
Ryan J. Wilson
University of Oregon - Lundquist College of Business ( email )
1280 University of Oregon
Eugene, OR 97403
United States
Feedback to SSRN


Paper statistics
Abstract Views: 13,264
Downloads: 3,653
Download Rank: 1,232
References:  49
Citations:  23

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo1 in 0.360 seconds