Abstract

http://ssrn.com/abstract=1787008
 
 

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Bringing Darkness to Light: The Influence of Auditor Quality and Audit Committee Expertise on the Timeliness of Financial Statement Restatement Disclosures


Jaime J. Schmidt


University of Texas at Austin

Michael S. Wilkins


Trinity University

August 5, 2011

Auditing: A Journal of Practice & Theory, Vol. 32, No. 1, 2013

Abstract:     
This study investigates whether auditor quality and audit committee expertise are associated with improved financial disclosure timeliness as measured by the duration of a financial statement restatement’s “dark period.” The restatement dark period represents the length of time between a company’s discovery that it will need to restate financial data and the subsequent disclosure of the restatement’s effect on earnings. For a sample of dark restatements disclosed during 2004–2009, we find that companies that engage Big 4 auditors have shorter dark periods than companies that do not engage Big 4 auditors. We also find that companies with more financial experts on the audit committee have shorter dark periods, particularly when such financial expertise relates specifically to accounting. Finally, companies with audit committee chairs that have accounting financial expertise have the greatest improvement in disclosure timeliness, as the dark periods for these firms are reduced by roughly 50%. Our results suggest that both auditor and audit committee expertise are important in facilitating the timely disclosure of restatement details.

Number of Pages in PDF File: 41

Keywords: financial reporting timeliness, financial statement restatements, audit quality, audit committees, financial expertise, accounting experience

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Date posted: March 19, 2011 ; Last revised: October 4, 2013

Suggested Citation

Schmidt, Jaime J. and Wilkins, Michael S., Bringing Darkness to Light: The Influence of Auditor Quality and Audit Committee Expertise on the Timeliness of Financial Statement Restatement Disclosures (August 5, 2011). Auditing: A Journal of Practice & Theory, Vol. 32, No. 1, 2013. Available at SSRN: http://ssrn.com/abstract=1787008 or http://dx.doi.org/10.2139/ssrn.1787008

Contact Information

Jaime J. Schmidt (Contact Author)
University of Texas at Austin ( email )
Austin, TX 78712
United States
Michael S. Wilkins
Trinity University ( email )
One Trinity Place
San Antonio, TX 78212-7200
United States
210-999-7347 (Phone)
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