The impact of external auditors on firms’ financial restatements. A review of archival studies and implications for future research

Publikation: Beiträge in ZeitschriftenZeitschriftenaufsätzeForschungbegutachtet

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The impact of external auditors on firms’ financial restatements. A review of archival studies and implications for future research. / Velte, Patrick.
in: Management Review Quarterly, Jahrgang 73, Nr. 3, 09.2023, S. 959-985.

Publikation: Beiträge in ZeitschriftenZeitschriftenaufsätzeForschungbegutachtet

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@article{5544fb0abb594361840f9c2898a99639,
title = "The impact of external auditors on firms{\textquoteright} financial restatements.: A review of archival studies and implications for future research",
abstract = "A systematic literature review includes 69 archival studies on the impact of external auditors on firms{\textquoteright} financial restatements, based on principal agent theory. In more detail, we separate between auditor incentives and auditor competencies to supply a high audit quality. Financial restatements represent one of the most important proxies of audit quality in archival audit research, stressing an increased relevance in empirical research, business practice and regulatory initiatives. The review highlights that many studies on auditor incentives and competencies show inconclusive results on firms{\textquoteright} financial restatements (e.g., fee and rotation studies). But there are indications that especially auditor expertise and audit firm size significantly decrease financial restatements. In discussing potential future research, we emphasize the need for a more detailed analysis of restatements proxies, controls for audit risk, inclusion of (corporate) governance mechanisms as possible moderators or mediators, and sustainability issues of the audit team.",
keywords = "Management studies, financial restatements, external auditor, corporate governance, restatements, enforcement",
author = "Patrick Velte",
note = "Leuphana Universit{\"a}t L{\"u}neburg Publisher Copyright: {\textcopyright} 2022, The Author(s).",
year = "2023",
month = sep,
doi = "10.1007/s11301-022-00264-x",
language = "English",
volume = "73",
pages = "959--985",
journal = "Management Review Quarterly",
issn = "2198-1620",
publisher = "Springer",
number = "3",

}

RIS

TY - JOUR

T1 - The impact of external auditors on firms’ financial restatements.

T2 - A review of archival studies and implications for future research

AU - Velte, Patrick

N1 - Leuphana Universität Lüneburg Publisher Copyright: © 2022, The Author(s).

PY - 2023/9

Y1 - 2023/9

N2 - A systematic literature review includes 69 archival studies on the impact of external auditors on firms’ financial restatements, based on principal agent theory. In more detail, we separate between auditor incentives and auditor competencies to supply a high audit quality. Financial restatements represent one of the most important proxies of audit quality in archival audit research, stressing an increased relevance in empirical research, business practice and regulatory initiatives. The review highlights that many studies on auditor incentives and competencies show inconclusive results on firms’ financial restatements (e.g., fee and rotation studies). But there are indications that especially auditor expertise and audit firm size significantly decrease financial restatements. In discussing potential future research, we emphasize the need for a more detailed analysis of restatements proxies, controls for audit risk, inclusion of (corporate) governance mechanisms as possible moderators or mediators, and sustainability issues of the audit team.

AB - A systematic literature review includes 69 archival studies on the impact of external auditors on firms’ financial restatements, based on principal agent theory. In more detail, we separate between auditor incentives and auditor competencies to supply a high audit quality. Financial restatements represent one of the most important proxies of audit quality in archival audit research, stressing an increased relevance in empirical research, business practice and regulatory initiatives. The review highlights that many studies on auditor incentives and competencies show inconclusive results on firms’ financial restatements (e.g., fee and rotation studies). But there are indications that especially auditor expertise and audit firm size significantly decrease financial restatements. In discussing potential future research, we emphasize the need for a more detailed analysis of restatements proxies, controls for audit risk, inclusion of (corporate) governance mechanisms as possible moderators or mediators, and sustainability issues of the audit team.

KW - Management studies

KW - financial restatements

KW - external auditor

KW - corporate governance

KW - restatements

KW - enforcement

UR - http://www.scopus.com/inward/record.url?scp=85127705795&partnerID=8YFLogxK

UR - https://www.mendeley.com/catalogue/897f0f51-2d14-38dc-a7d6-76f56bb1c0c6/

U2 - 10.1007/s11301-022-00264-x

DO - 10.1007/s11301-022-00264-x

M3 - Journal articles

VL - 73

SP - 959

EP - 985

JO - Management Review Quarterly

JF - Management Review Quarterly

SN - 2198-1620

IS - 3

ER -

DOI