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European market reaction to audit reforms
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Horton, Joanne, Tsipouridou, Maria and Wood, Anthony (2018) European market reaction to audit reforms. European Accounting Review, 27 (5). pp. 991-1023. doi:10.1080/09638180.2017.1394203 ISSN 0963-8180.
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Official URL: http://dx.doi.org/10.1080/09638180.2017.1394203
Abstract
This paper investigates European stock market reaction to events associated with the proposed EU audit reforms that were ultimately implemented in 2016. These include, inter alia, mandatory audit firm rotation, prohibition of non-audit services, and fee caps. We find that investors react positively to the proposals, lifting aggregate market value by approximately €108,630 million. In cross-sectional analysis at both country and firm level, we find that these net benefits arise from the prohibition of non-audit services and the placing of a cap on total fees charged by the auditor. Furthermore, we find investors in firms with low earnings quality appear to perceive the greatest benefits from the proposed reforms.
Item Type: | Journal Article | ||||||||
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Divisions: | Faculty of Social Sciences > Warwick Business School | ||||||||
Journal or Publication Title: | European Accounting Review | ||||||||
Publisher: | Routledge | ||||||||
ISSN: | 0963-8180 | ||||||||
Official Date: | 2018 | ||||||||
Dates: |
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Volume: | 27 | ||||||||
Number: | 5 | ||||||||
Page Range: | pp. 991-1023 | ||||||||
DOI: | 10.1080/09638180.2017.1394203 | ||||||||
Status: | Peer Reviewed | ||||||||
Publication Status: | Published | ||||||||
Access rights to Published version: | Restricted or Subscription Access |
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