Audit and the press

How negative publicity influences audit quality

RESTATEMENTS AND FILINGS Descriptive Statistics

The first table below shows the number of companies with low audit quality as indicated by each discrete proxy for all the companies included in the primary sample. The percentage in parenthesis indicates the percentage of all companies. The second table shows the same statitics on the final model sample (after excluding observations with missing values on any of the control variables and companies from the Financial Services Industry). The plots illustrate percentages from the tables.

3644

Discrete Proxies including GAO

4051

4319

6338 RobustnessCheck 9: new dependent variables for discrete Table 50: Discrete Proxies Logistic Regression Models, Missing PSS excluded from Modelling

6428 PSS + n_NEWS

Regression Results

	Dependent variable:
	GAO	Audit Analytics	SCAC	AAERs
	(1)	(2)	(3)	(4)
Intercept	1.63*	0.75**	8.83***	3.82***
	(0.87)	(0.37)	(0.83)	(1.08)
MSS	-0.05***	-0.03***	-0.17***	-0.11***
	(0.02)	(0.01)	(0.02)	(0.02)
Number of Media Articles	0.39***	0.26***	-0.05	0.07
	(0.08)	(0.03)	(0.05)	(0.08)
Cash Flows	-1.19*	0.41**	-0.31	-0.46
	(0.62)	(0.18)	(0.42)	(0.59)
Leverage	0.12	0.08*	0.08	0.02
	(0.43)	(0.05)	(0.17)	(0.09)
Firm Growth	-0.06	-0.03	0.04	0.15
	(0.08)	(0.03)	(0.06)	(0.10)
Return	0.27	-0.08	0.41	0.07
	(0.44)	(0.08)	(0.29)	(0.21)
Loss	0.13	-0.05	-0.11	-0.12
	(0.15)	(0.06)	(0.13)	(0.18)
Firm Size (USD million)	0.0000	0.0000	0.0000	-0.0000
	(0.0000)	(0.0000)	(0.0000)	(0.0000)
Observations	1,201	6,269	1,454	1,557
Log Likelihood	-736.62	-4,222.08	-926.56	-539.95
Akaike Inf. Crit.	1,491.24	8,462.16	1,871.11	1,097.90
Note:	p<0.1; p<0.05; p<0.01

Regression Results

	Dependent variable:
	Low_Audit_Quality
	(1)	(2)	(3)
Intercept	2.48***	3.22***	-0.80***
	(0.29)	(0.24)	(0.03)
MSS	-0.06***	-0.07***
	(0.01)	(0.005)
Number of Media Articles	0.23***		0.25***
	(0.02)		(0.02)
Cash Flows	0.20
	(0.15)
Leverage	0.05
	(0.04)
Firm Growth	-0.01
	(0.02)
Return	-0.001
	(0.06)
Loss	-0.04
	(0.05)
Firm Size (USD million)	-0.0000
	(0.0000)
Observations	10,481	11,640	11,640
Log Likelihood	-6,796.25	-7,698.99	-7,690.82
Akaike Inf. Crit.	13,610.50	15,401.99	15,385.64
Note:	p<0.1; p<0.05; p<0.01

6603 ### Differenced controls (current - lag)

10467 Sensitivity Analysis: Non Big 4 Auditors Only Table 100: Discrete Proxies Logistic Regression Models, Missing PSS excluded from Modelling

11252 Sensitivity Analysis: Bottom 30% by Firm Size (Firm Size less than 100) Table 110: Discrete Proxies Logistic Regression Models, Missing PSS excluded from Modelling

12025 Sensitivity Analysis: Excluding years 2001,2002,2007 & 2008 Table 120: Discrete Proxies Logistic Regression Models, Missing PSS excluded from Modelling