Does the PCAOB's International Inspection Program Improve Audit Quality for Non-US-Listed Foreign Clients?
Journal of Accounting and Economics (August 2017), 64(1): 15-36.
Posted: 14 Apr 2017 Last revised: 28 Apr 2018
Date Written: April 13, 2017
We examine whether the Public Company Accounting Oversight Board (PCAOB) international inspection program improves audit quality for a sample of non-US-listed foreign public client companies from 55 countries audited by foreign (i.e., non-US) auditors. For a sample of non-US-listed clients of PCAOB-registered foreign auditors, we find that initial PCAOB inspections improve audit quality, over and above the threat of such inspections, for foreign auditors’ non-US-listed foreign clients. Our findings document the benefits of PCAOB international inspections for foreign investors in non-US-listed foreign companies which could increase the acceptability of the PCAOB international inspection program abroad.
Keywords: PCAOB international inspection program; Foreign auditors; Non-US-listed foreign public companies; Audit quality; Positive externality
JEL Classification: G18, L11, L15, L51, L80, M40, M41, M42, M48
Suggested Citation: Suggested Citation