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We examine the impact of the Sarbanes–Oxley Act of 2002 (SOX) and the global economic crisis of 2008 on revenue generation patterns of public accounting and law firms. Using a sample of firm-year observations from both industries, we show that since the enactment of SOX, public accounting firms have significantly increased leveraging of partner time and decreased charge-out rates to boost their revenue per partner. While law firms also exhibit an increase in revenue per partner in the post-SOX era, their increase is rooted in higher average charge-out rates and lower leveraging. During the crisis, the public accounting industry was insulated by the relatively inelastic nature of its services. By contrast, law firms suffered a decline in demand for their services, which reduced their revenue generation by reducing their charge-out rates. We also consider cross-sectional variations within each industry and find significant differences across firms in the impact of SOX and the economic crisis. Notably, large firms in both industries were more significantly impacted by SOX and the Big 4 accounting firms were adversely impacted during the crisis. Our study sheds light on the revenue generation and human resource consequences of two significant macroeconomic events for two professional service industries that serve as watchdogs in our capital markets. [ABSTRACT FROM AUTHOR]

In this study, we examine the consequences of CEO facial masculinity for accounting conservatism. Facial masculinity is associated with an array of masculine behaviours including aggression, ambition, egocentricity, risk taking, and an increased desire to maintain social status. We predict that such behaviours lead to aggressive financial reporting practices that incorporate bad news into earnings in a less timely manner (i.e. lower conditional conservatism). Using a sample of S&P 1500 firms from 1993 to 2015, we find that CEOs' facial masculinity is associated with less conservative accounting. This finding is robust to the use of several measures of conservatism. Further, we document that stronger external monitoring dampens the negative relationship between CEO facial masculinity and conservatism. Our findings complement recent work that reveals CEO facial masculinity is positively associated with fraud and AAERs, and contributes to the literature by documenting the effect of an 'off the job' CEO characteristic on accounting conservatism. [ABSTRACT FROM AUTHOR]

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Using a sample of industry-diverse nonprofit organizations, we find support for stakeholders’ use of nonprofit going-concern audit opinion (GCO) reports. We study the reactions of the three largest nonprofit stakeholder groups: donors, service recipients, and managers. Our findings suggest that although large (sophisticated) donors respond negatively to a GCO, small (unsophisticated) donors contribute more following a GCO. We also find that service recipients spend more at service-oriented organizations than at charitable nonprofits following a GCO. Finally, managers respond to a GCO by increasing organizational efficiency at service-oriented organizations. Taken together, the evidence suggests that GCOs are informative in the nonprofit sector, and stakeholders’ responses to GCOs depend on stakeholder and organization type. [ABSTRACT FROM AUTHOR]

There is considerable debate about whether the adoption of eXtensible Business Reporting Language (XBRL) will result in timelier SEC filings. We provide empirical evidence on this debate by investigating the effect of XBRL adoption on audit report lags. Using a hand-collected panel of S&P 1500 clients' XBRL financial report filings and both levels and difference-in-differences analyses, we show that audit report lags decrease following the mandatory adoption of XBRL. These results are robust to various subsamples and model specifications. On average, audit report lags decrease anywhere from 0.4 to 3.4 percent (0.21 to 1.93 days) in the post-adoption period, depending on the specification used. We further document that these results are concentrated among filers with strong internal control systems and no prior XBRL reporting experience. We also find that audit report lags continue to decline in the years following adoption, which is indicative of a learning curve and improvements in XBRL reporting quality. Additional tests reveal that XBRL is negatively associated with audit fees, suggesting that the XBRL effect is at least partially driven by auditor efficiency gains. Our findings are informative for assessing the economic consequences of requiring XBRL adoption, which should be of interest to regulators, managers and researchers. [ABSTRACT FROM AUTHOR]