Understanding the Relation between Financial Reporting Quality and Audit Quality

55 Pages Posted: 16 Mar 2016 Last revised: 21 Apr 2016

See all articles by Lisa Milici Gaynor

Lisa Milici Gaynor

University of South Florida - School of Accountancy

Andrea Seaton Kelton

Wake Forest University - Babcock Graduate School of Management and Wayne Calloway School of Business and Accountancy

Molly Mercer

DePaul University

Teri Lombardi Yohn

Indiana University - Kelley School of Business - Department of Accounting

Date Written: March 15, 2016

Abstract

A primary goal of both financial reporting research and audit research is to understand the determinants of quality, and researchers in both areas have identified a wide set of variables that enhance or impair quality. In this paper, we define financial reporting quality and audit quality and use a person/task/environment framework to summarize prior findings on the determinants of each. We use this framework to discuss the links between the financial reporting and audit academic literatures and highlight the recursive relation between financial reporting quality and audit quality. Our discussion provides insights and suggestions on how financial reporting and audit researchers can learn from each other to improve our collective understanding of financial reporting and audit quality. Using this framework, we also identify opportunities for future research.

Keywords: Financial reporting quality, audit quality, quality proxies, quality determinants

Suggested Citation

Gaynor, Lisa Milici and Kelton, Andrea Seaton and Mercer, Molly and Yohn, Teri Lombardi, Understanding the Relation between Financial Reporting Quality and Audit Quality (March 15, 2016). Auditing: A Journal of Practice & Theory, Forthcoming; Kelley School of Business Research Paper No. 16-26. Available at SSRN: https://ssrn.com/abstract=2748054

Lisa Milici Gaynor (Contact Author)

University of South Florida - School of Accountancy ( email )

4202 E. Fowler Avenue, BSN 3403
Tampa, FL 33620-5500
United States

Andrea Seaton Kelton

Wake Forest University - Babcock Graduate School of Management and Wayne Calloway School of Business and Accountancy ( email )

United States

Molly Mercer

DePaul University ( email )

1 E Jackson Blvd Suite 6000
Chicago, IL 60604
United States
(312)362-8956 (Phone)

Teri Lombardi Yohn

Indiana University - Kelley School of Business - Department of Accounting ( email )

1309 E. 10th Street
Bloomington, IN 47405
United States
(812) 855-0430 (Phone)

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