The Association between PCAOB Revenue-Deficient Audit Engagements and Revenue Quality
研究PCAOB检查发现的收入相关审计缺陷变化如何影响审计客户后续的收入质量，发现审计缺陷增加会促使审计质量提升，但减少则不会。
ABSTRACT The Big 4 auditors are inspected annually by the Public Company Accounting Oversight Board (PCAOB), with the summarized findings (labeled “audit deficiencies”) being publicly available on its website. Although the PCAOB claims that its inspection findings and process are designed to increase audit quality, there is limited empirical evidence to support this claim. We examine whether changes in revenue-deficient audit engagements are associated with subsequent year changes in client revenue quality. A revenue-deficient audit engagement is an inspected engagement that has at least one revenue-related audit deficiency. To infer audit quality, we link year-over-year changes in revenue-deficient audit engagements to the subsequent year’s change in engagement-level revenue quality—a common financial reporting quality proxy. We predict that audit firms will react asymmetrically to changes in revenue-deficient audit engagements: increases will prompt audit quality improving actions, but decreases will not. Our results support our prediction. JEL Classifications: M42.