Does Public Company Accounting Oversight Board Regulatory Enforcement Deter Low-Quality Audits?
利用双重差分法，研究发现PCAOB执法后，大型审计事务所的办公室会因同一事务所内其他办公室被处罚而提高审计质量，小型事务所则因当地小型竞争对手被处罚而改善，且效果因执法类型和地理邻近性而异。
ABSTRACT Regulatory economics suggests that one benefit of public enforcement is the deterrence of improper conduct. Using a difference-in-differences (DiD) design, we investigate whether a deterrence effect follows the revelation of Public Company Accounting Oversight Board (PCAOB) enforcement. We find that large audit firm offices improve audit quality following enforcement naming another office within their firm while small firm offices improve following enforcement of local small firm competitors, with these responses varying by enforcement type. To understand potential mechanisms for the geographic deterrence effect, we examine the first occurrence of a revoked PCAOB registration within a market and find that results are stronger if there is greater news coverage or if nonsanctioned firms are in closer proximity to the sanctioned auditor. Supplemental tests reveal that results are stronger when nonsanctioned auditor clients are similar to the sanctioned firm’s clientele. Our findings suggest a positive but varied deterrence effect following PCAOB enforcement. JEL Classifications: G38; M42; M48.