DO CLIENTS WITH LOCAL AUDITORS ANNOUNCE EARNINGS EARLIER?

Bei Dong ； Le (Emily) Xu)

《Advances in Quantitative Analysis of Finance and Accounting》 17期 (2019/12) Pp. 163-191

https://doi.org/10.6293/AQAFA.201912_(17).0006

摘要

Investors and regulators value the timely release of earnings information. However, changes in regulatory environment have placed increased difficulty for companies to provide timely and reliable financial reporting. This paper examines whether geographic proximity between the auditor and client affects the timeliness of earnings announcements, one of the most persuasive periodic corporate events. Because prior literature finds that local auditors are able to complete the audits in a more timely fashion and earnings announcements are more reliable when audits are more completed at the time of earnings announcements, we contend that managers of companies with local auditors would have less concern on reliability of information released and be more confident to make timely earnings announcements. We find strong evidence that earnings announcements are timelier for clients using local auditors. Further, we document that this effect is stronger for companies in a less transparent information environment, weaker for companies with greater accounting and audit complexity, and generally weaker for companies using larger audit offices. Our results are robust to controlling for potential self-selection bias associated with clients' choice of local versus non-local auditors.

關鍵字

Auditor-Client Geographic Proximity ； Earnings Announcement Timeliness ； Information Environment Transparency ； Accounting and Audit Complexity ； Audit Office Size

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