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

• In Event: Non-Audit Services, Audit Timing

Abstract

Using the Super Bowl as an exogenous distraction to auditing firms located in the same Metropolitan Statistical Area (MSA) as the Super Bowl’s host city, we examine the impact of a disruptive shock to the auditing process. Given the magnitude of hosting the Super Bowl, combined with the game falling during the audit “busy season” this results in an ideal setting for a natural experiment. We use data on Super Bowl host cities from 2000-2015 to show that firms with auditors headquartered in the hosting MSA experience both statistically and economically significant decreases in the timeliness of financial reporting and increases in audit fees. Firms experience increases in financial reporting lags of 3.11percent (1.85 days), 2.98 percent (1.46 days), and 1.65 percent (1.21 days) for their audit report, earnings announcement, and 10-K filings, respectively. As auditing firms must either absorb the cost of these additional delays internally, or pass them to the firm being audited, we find that the cost passed to the client is an average 6.77 percent ($31,159) increase in audit fees. Our results should be of interest to regulators, auditors, investors, and academics, as our findings suggest both a timeliness consequence and financial consequence to publicly-traded companies in the local MSA hosting the Super Bowl.

Authors

• Matthew Crook, University of Tulsa

• Tamara A Lambert, Lehigh University

• Brian Walkup, University of Tulsa

• James D Whitworth, University of South Florida