The credibility of self-regulation: evidence from the accounting profession's peer review program

Gilles Hilary, Clive Lennox

Research output: Contribution to journalArticlepeer-review

85 Citations (Scopus)

Abstract

Following the Sarbanes–Oxley Act, self-regulated peer reviews at accounting firms were replaced by independent inspections conducted by the Public Company Accounting and Oversight Board. Critics of self-regulation had argued that the peer review program lacked credibility. This paper tests whether the opinions issued by the peer reviewers provided credible information to clients about audit firm quality. We find audit firms gained clients after receiving clean opinions from their reviewers and lost clients after receiving modified or adverse opinions. This suggests peer review opinions provided credible information about quality differences between audit firms.
Original languageEnglish
Pages (from-to)211-229
JournalJournal of Accounting and Economics
Volume40
Issue number1-3
DOIs
Publication statusPublished - 1 Dec 2005

Fingerprint Dive into the research topics of 'The credibility of self-regulation: evidence from the accounting profession's peer review program'. Together they form a unique fingerprint.

Cite this