The Influence of Differential Interim Reporting Requirements on Audit Effort for Foreign Private Issuers

• In Event: Donor Reactions, Interim Reporting, International Governance & Church Fraud Prevention

Abstract

Prior research has long been interested in the impact of cross-listing on audit effort and how agency problems are addressed for foreign private issuers [FPIs]. We extend this research by examining the effect of differential filing requirements for FPI interim financial reports on audit fees and audit report lags. We find that timely interim financial reviews are associated with a decrease in audit fees for FPIs. In addition, we find that this fee reduction is greater when the frequency of reviewed interim reports is higher. We also find, however, that more frequent interim reviews are associated with longer audit report lags. When we analyze the influence of mandatory versus voluntary review environments on these results, we find that firms voluntarily purchasing timely reviews incur higher audit fees, while mandatory reviews are associated with longer audit report lags.

Authors

• Angel Arturo Pacheco Paredes, Florida International University

• Clark M Wheatley, Florida International University