Auditing the Auditors: Evidence on the PCAOB’s Inspections of Audit Firms

Posted: 27 Aug 2011

See all articles by Clive S. Lennox

Clive S. Lennox

University of Southern California

Jeffrey Pittman

Memorial University of Newfoundland (MNU) - Faculty of Business Administration

Date Written: February 1, 2010

Abstract

This paper analyzes audit firm supervision since the Public Company Accounting Oversight Board (PCAOB) began conducting inspections. First, we find that audit clients do not perceive that the PCAOB’s inspection reports are valuable for signaling audit quality. Second, we document that the information content of peer review reports fell after they became narrower in scope with the initiation of PCAOB inspections. Third, we isolate that the signaling role of peer review reports mainly stems from information that PCAOB inspectors do not publicly disclose. Collectively, our evidence implies that less is known about audit firm quality under the new regulatory regime.

Keywords: Regulation, Sarbanes-Oxley Act, PCAOB

JEL Classification: G18, L51, M42

Suggested Citation

Lennox, Clive and Pittman, Jeffrey A., Auditing the Auditors: Evidence on the PCAOB’s Inspections of Audit Firms (February 1, 2010). Journal of Accounting & Economics (JAE), Vol. 49, Nos. 1/2, p. 84, February 2010. Available at SSRN: https://ssrn.com/abstract=1917887

Clive Lennox (Contact Author)

University of Southern California ( email )

2250 Alcazar Street
Los Angeles, CA 90089
United States

Jeffrey A. Pittman

Memorial University of Newfoundland (MNU) - Faculty of Business Administration ( email )

St. John's, Newfoundland A1B 3X5
Canada
709-737-3100 (Phone)
709-737-7680 (Fax)

Register to save articles to
your library

Register

Paper statistics

Abstract Views
1,045
PlumX Metrics
!

Under construction: SSRN citations while be offline until July when we will launch a brand new and improved citations service, check here for more details.

For more information