Auditor Office Reputation Damage and Their Audit Clients’ Voluntary Disclosures
研究发现，当审计事务所声誉受损后，其非重述客户会增加管理层预测的发布数量，这替代了审计质量下降的影响，且在信息需求高或披露成本低时更明显，最终降低了股权成本并提高了回报。
SUMMARY We examine how client firms of reputationally damaged auditor offices respond to perceived lower audit quality, focusing on the issuance of management forecasts. We find that nonrestating client firms that stay with their reputationally damaged auditor office increase their number of management forecasts, which is consistent with a substitution effect between audited financial reporting quality and voluntary disclosure. Further, the disclosure response of these clients is more pronounced when the client firm is exposed to a higher information demand environment or is exposed to lower proprietary costs of disclosure. Finally, we document that increases in management forecasts bring market benefits for clients audited by reputationally damaged auditor offices by reducing the cost of equity and improving realized returns for these firms. Data Availability: All data used in the study are available from public sources identified within. JEL Classifications: M41; M45; M49.