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Does the PCAOB international inspection program improve audit quality for non-US-listed foreign clients?

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  • Fung, Simon Yu Kit
  • Raman, K.K.
  • Zhu, Xindong (Kevin)

Abstract

We examine whether the Public Company Accounting Oversight Board (PCAOB) international inspection program improves audit quality for a sample of non-US-listed foreign public client companies from 55 countries audited by foreign (i.e., non-US) auditors. For a sample of non-US-listed clients of PCAOB-registered foreign auditors, we find that initial PCAOB inspections improve audit quality, over and above the threat of such inspections, for foreign auditors’ non-US-listed foreign clients. Our findings document the benefits of PCAOB international inspections for foreign investors in non-US-listed foreign companies which could increase the acceptability of the PCAOB international inspection program abroad.

Suggested Citation

  • Fung, Simon Yu Kit & Raman, K.K. & Zhu, Xindong (Kevin), 2017. "Does the PCAOB international inspection program improve audit quality for non-US-listed foreign clients?," Journal of Accounting and Economics, Elsevier, vol. 64(1), pages 15-36.
  • Handle: RePEc:eee:jaecon:v:64:y:2017:i:1:p:15-36
    DOI: 10.1016/j.jacceco.2017.04.002
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    2. repec:spr:reaccs:v:23:y:2018:i:4:d:10.1007_s11142-018-9464-0 is not listed on IDEAS
    3. repec:gam:jscscx:v:8:y:2019:i:2:p:53-:d:205871 is not listed on IDEAS
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    More about this item

    Keywords

    PCAOB international inspection program; Foreign auditors; Non-US-listed foreign public companies; Audit quality; Positive externality;

    JEL classification:

    • M4 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting
    • M49 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Other

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