Does Tightening Auditing Standards Improve or Impair Welfare?

This study investigates the effects of tightening auditing standards in a setting of an oligopolistic audit market and a competitive capital market. I look at how tightening auditing standards affects audit quality, audit fee, audit market share, stock price, and investment decisions. Two audit firms engage in a two-stage competition: audit quality competition and audit fee competition. Audit quality has a dual role: (a) audit quality affects the credibility of the accounting reports (precision effect); (b) a company’s choice of a high-quality versus a low-quality audit firm signals its hidden information about its economic prospects (signaling effect). I find that tightening auditing standards will improve the credibility of accounting reports of those companies that stick to original auditors and impair the credibility of accounting reports of those companies that switch auditors.

Name thesis:degree_name

Doctor of Philosophy

Level thesis:degree_level

Doctoral

Discipline thesis:degree_discipline

Business Administration

Grantor

University of Houston

Year dc:date.issued

2019

Author dc:creator

• Ruan, Lijun

Advisor dc:contributor.advisor

• Lu, Tong

Committee members dc:contributor.committeemember

• Lin, Haijin
• Langberg, Nisan
• Seo, Sang Byung

• Auditing standards
• Audit fee
• Audit quality
• Capital markets

Statement dc:rights

• The author of this work is the copyright owner. UH Libraries and the Texas Digital Library have their permission to store and provide access to this work. Further transmission, reproduction, or presentation of this work is prohibited except with permission of the author(s).

Language dc:language.iso

eng

Handle dc:identifier.uri

https://hdl.handle.net/10657/5815

OAI identifier oai:identifier

oai:uh-ir.tdl.org:10657/5815