|
Do Changes in Audit Delay Affect Earnings Quality?
Tamara A Lambert,
Drexel University
Joseph F Brazel, North Carolina State University
Keith L Jones, George Mason University
ABSTRACT. SEC rule 33-8644 reduces the 10-K filing period for large accelerated filers and accelerated filers from 90 to 60 and 75 days, respectively, for fiscal years ending on or after December 15, 2006. For many firms, this legislation will lead to a reduction in audit delay, the length of time from a company’s fiscal year end to the date of the auditor’s report. We investigate the potential effects of this legislation by examining if and how changes in audit delay have been historically associated with earnings quality. We find a negative relation between change in audit delay and discretionary accruals that is more acute for “busy-season” audits, and that differs by filer type. We employ an alternative measure of financial reporting quality, conservatism, and find that reductions in audit delay are associated with lower levels of conservatism. Overall, our results support claims by auditors and preparers that SEC rule 33-8644 may reduce the quality of reported financial information.
Full-Text is no longer available online. Please contact the author(s) for more information about this manuscript.
Back to Session Listing
|