Influenza: An Exogenous Shock to Auditor Health and Audit Outcomes
56 Pages Posted: 24 Aug 2018 Last revised: 14 Mar 2020
Date Written: January 1, 2019
This study examines whether influenza (flu), a previously unidentified threat to the conduct of public company audits, is associated with audit outcomes. Because the peak months of flu season overlap with audit busy season, audit offices most impacted by the flu may be adversely affected. The demanding nature of audit busy season and the culture of audit firms may compel employees to go to work sick, a phenomenon known as presenteeism. When sick auditors go to work the influence of the flu on their cognitive functioning and performance is not readily observable in the workplace, leading to adverse outcomes. Using data collected from the Centers for Disease Control and Prevention (CDC) we find that the filing of audit reports is delayed, audit quality suffers, and audit production costs increase in audit offices most impacted by the flu. This study informs regulators and practitioners with a vested interest in auditor judgment and audit quality and suggests that changes to audit firm culture may influence how auditors cope with the flu. This study also offers unique insights into the importance of auditor health on audit quality and other audit outcomes.
Keywords: audit report lag; non-timely filings; audit quality; discretionary accruals; material weaknesses; audit production costs; influenza
JEL Classification: I10, I12, E24, J24, M41, M42, M54
Suggested Citation: Suggested Citation