Auditor-Client Geographic Proximity and Earnings Announcement Timeliness

• In Event: Welcome to Financial Reporting

Abstract

Investors and regulators value the timely release of earnings information. However, changes in the regulatory environment have placed increased time pressure on companies’ financial reporting and the audit function. This paper examines whether geographic proximity between the auditor and client affects the timeliness of earnings announcements. We find that earnings announcements are more timely for clients using local auditors. Further, we find 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.

Authors

• Bei Dong, University of South Florida

• Dahlia M Robinson, University of South Florida

• Le Xu, University of New Hampshire