All My Rowdy Friends: The Effect of Super Bowl Hosting on Audit Timing

Abstract

Purpose – The purpose of this paper is to examine the impact hosting the Super Bowl has on audit completion and financial reporting timeliness for companies headquartered in Super Bowl hosting cities.
Design/methodology/approach – Using 16 years of financial reporting data, we use the Super Bowl and related activities, combined with required filings during “busy season,” as a natural experiment to examine how audit firms navigate short-term, exogenously imposed but anticipated, audit team capacity constraints.
Findings – Companies headquartered in a city hosting the Super Bowl, during busy season, have longer audit report lags (by approximately three days, in comparison to non-hosting busy season audits) and less timely SEC (10-K) filings. We find no evidence that Super Bowl hosting affects audit fees or earnings announcement timeliness.
Practical Implications – When confronted with anticipated capacity shocks, audit firms take longer to complete the audit, absorbing the financial costs of the delay and maintaining audit quality, resulting in less timely financial reporting.
Originality/value – Our study demonstrates the costs of Super Bowl-related inefficiencies and contributes to our understanding of how auditors navigate capacity shocks. We provide evidence that auditors can effectively manage business risk and continue to facilitate providing timely and accurate information to financial statement users in the face of a capacity shock.

Keywords: Audit Report Lag, Audit Delay, Audit Fees, Time Pressure

JEL Classification: M42, M40, M41