Proposed Topics Discussed by Chou and Yu  Ph.D. Seminar in Auditing (Fall 2007)
(1) Overview of Auditing Research and Auditors’ Legal Liabilities (Week #1
9/20)  Yu
 Background papers:
(a) DeFond, M.L. and J.R. Francis. 2004. Does auditing matter? AAA 2004 Doctoral Consortium (Note: This paper was finally
published at the Auditing journal with the following citation: DeFond, M., and J. Francis. 2005. Auditing research after
Sarbanes-Oxley. Auditing: A Journal of Practice and Theory 25:5-30).
(b) Latham, C. K. and M. Linville. 1998. A review of the literature in audit litigation. Journal of Accounting Literature 17: 175213.
(c) King, R. R. and R. Schwartz. 1997. The Private Securities Litigation Reform Act of 1995: A discussion of three provisions.
Accounting Horizon 11 (March): 92106.
 Discussion papers:
(a) Bonner, S.E., Z. Palmrose, and S.M. Young. 1998. Fraud type and auditor litigation: An analysis of SEC Accounting and Auditing
Enforcement Releases. The Accounting Review 73 (October): 503-532. (Yu)
(b) Johnson, M.F., R. Kasznik, and K.K. Nelson. 2002. The impact of Securities Litigation Reform on the disclosure of
forward-looking information by high technology firms. Journal of Accounting Research 39 (supplement): 297-327. (Yu)
(c) Johnstone, K. M. and J.C. Bedard. 2004. Audit Firm Portfolio Management Decisions. Journal of Accounting
Research 42 (September): 659-690. (Ph.D. student)
(d) Khurana, I.K. and K.K. Raman. 2004. Litigation Risk and the Financial Reporting Credibility of Big 4 versus Non-Big 4 Audits:
Evidence from Anglo-American Countries. The Accounting Review 79 (April): 473-95. (Ph.D. student)
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(2) The Sarbanes-Oxley Act of 2002:
 Background papers:
(a) Sarbanes-Oxley Act of 2002. Public Law No. 107-204. Washington D.C.: US Government Printing Office.
(b) DeFond, M., and J. Francis. 2005. Auditing research after Sarbanes-Oxley. Auditing: A Journal of Practice and Theory 25: 5-30.
 Discussion papers:
(a) Auditor Independence: (Week #2
9/27)  Yu
 Section 201: Frankel, R.M., M.F. Johnson, and K.K. Nelson. 2002. The relation between auditors’ fees for non-audit services
and earnings management. The Accounting Review 77 (supplement): 71-114. (Yu)
 Section 206: Lennox, C. 2005. Audit quality and executive officers’ affiliations with CPA firms. Journal of accounting &
Economics 39 (June): 201-231. (Ph.D. student)
 Section 207: Myers, J.N., L.A. Myers, and T.C. Omer. 2003. Exploring the Term of the Auditor-Client Relationship and the
Quality of Earnings: A Case for Mandatory Auditor Rotation? The Accounting Review 78 (July): 779-99. (Ph.D.
student)
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(b) Audit Committee: (Week #3
10/4)  Yu
 Section 301: Klein, A. 2002. Economic determinants of audit committee independence. The Accounting Review 77 (April):
435-454. (Yu)
 Section 407: DeFond, M.M., R.N. Hann, and X. Hu. 2005. Does the Market Value Financial Expertise on Audit Committees of
Boards of Directors? Journal of Accounting Research 43 (May): 153-193. (Ph.D. student)
 Karamanou, I. and N. Vafeas. 2005. The association between corporate boards, audit committees, and management earnings
forecasts: An empirical analysis. Journal of Accounting Research 43 (3): 453-486. (Ph.D. student)
(c) Internal Controls: (Week #4
Section 404:
10/12)  Chou
 Krishnan, J. 2005. Audit committee quality and internal control: An empirical analysis. The Accounting Review.
Vol. 80, No. 2: 649-675.
 Doyle, J., W. Ge, and S. McVay. 2007. Determinants of weakness in internal control over financial reporting.
Journal of Accounting & Economics 44 (1): 193-223.
 Patterson, E.R. and J.R. Smith. 2007. The effects of Sarbanes-Oxley on auditing and internal control strength.
The Accounting Review. Vol. 82, No. 2: 427-455.
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(d) Economic Consequences of SOX: (Week #5
10/19)  Chou
 DeFond, M., M. Hung, E. Karaoglu, and J. Zhang, 2006. Was the Sarbanes-Oxley Act good news for bondholders?
Working paper. University of Southern California.
 Engel, E., R.M. Hayes, and X. Wang. 2007. The Sarbanes-Oxley Act and firms’ going-private decisions. Journal of
Accounting & Economics 44: 116-145.
 Zhang, X. 2007. Economic consequences of the Sarbanes-Oxley Act of 2002. Journal of Accounting & Economics 44:
74-115.
(3) Audit Quality: (Week #6
10/25)  Yu
 Background papers:
Watkins, A., W. Hillison and S. Morecroft. 2004. Audit quality: A synthesis of theory and empirical evidence. Journal of Accounting
Literature 23:153-193
 Discussion papers:
(a) Blouin J., B. Grein, and B. Rountree. 2005. An analysis of forced auditor change: The case of former Arthur Andersen clients. The
Accounting Review 82 (3): 621-647. (Yu)
(b) Mansi, S.A., W.F. Maxwell, and M.P. Darius. 2004. Does Auditor Quality and Tenure Matter to Investors? Evidence from the Bond
Market. Journal of Accounting Research 42 (September): 755-793. (Ph.D. student)
(c) Hamilton, J., C. Ruddock, D. Stokes, and S. Taylor. 2005. Audit partner rotation, earnings quality and earnings conservatism.
Working paper. University of New South Wales. (Ph.D. student)
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(4) Audit Pricing: (Week #7
11/1)  Yu
(a) Craswell, A.T. and J.R. Francis. 1999. Pricing initial audit engagements: A test of competing theories. The Accounting Review 74
(April): 201-216.
(b) Francis, J.R., K. Reichelt, and D. Wang. 2005. The Pricing of National and City-Specific Reputations for Industry Expertise in the
U.S. Audit Market. The Accounting Review 80 (January): 113-36.
(c) Whisenant, J.S., S. Sankaraguruswamy, and K. Raghunandan. 2003. Evidence on the Joint Determination of Audit and Non-Audit
Fees. Journal of Accounting Research 41 (September): 721-744.
(5) Auditor Changes / Choices: (Week #8
11/8)  Yu
(a) Pittman, J. A. and S. Fortin. 2004. Auditor choice and the cost of debt capital for newly public firms. Journal of accounting &
Economics 37 (February):
113-136. (Yu)
(b) Louis, H. 2005. Acquirers’ abnormal returns and the non-Big 4 auditor clientele effect. Journal of Accounting & Economics 40:
75-99. (Ph.D. student)
(c) Carey, P. and R. Simnett. 2006. Audit partner tenure and audit quality. The Accounting Review. 81 (3): 653-676. (Ph.D. student)
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(6) Audit and Earnings Management: (Week #9
11/16)  Chou
(a) Nelson, M.W., J.A. Elliott, and R.L. Tarpley. 2002. Evidence from auditors about managers’ and auditors’ earnings management
decisions. The Accounting Review 77 (supplement): 175-202.
(b) Butler, M., A.J. Leone, and M. Willenborg. 2004. An empirical analysis of auditor reporting and its association with abnormal
accruals. Journal of accounting & Economics 37 (June):139-165.
(c) Becker, C.L., M.L. DeFond, J. Jiambalvo, and K.R. Subramanyam. 1998. The effect of audit quality on earnings management.
Contemporary Accounting Research 15 (Spring): 1-24.
(7) Corporate Governance and Fraud Detection: (Week #10
11/23)  Chou
(a) Fan, J.P.H. and T.J. Wong. 2005. Do external auditors perform a corporate governance role in emerging markets? Evidence from
East Asia. Journal of Accounting Research 43 (March): 35-72.
(b) Srinivasan, S. 2005. Consequences of Financial Reporting Failure for Outside Directors: Evidence from Accounting Restatements
and Audit Committee Members. Journal of Accounting Research 43 (May): 291-334.
(c) Guedhami, O. and J.A. Pittman. 2006. Ownership concentration in privatized firms: The role of disclosure standards, auditor
choice, and auditing infrastructure. Journal of Accounting Research 44 (5): 889-929.
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(d) The effectiveness of the auditor's going concern evaluation as an external governance mechanism: Evidence from
loan defaults (Illinois Symposium Paper). (Chou)
(8)Audit Risk: (Week #11
11/30)  Chou
(a) Cahan, S.F. and W. Zhang. 2006. After Enron: Auditor conservatism and ex-Andersen clients. The Accounting Review. 81 (1):
49-82.
(b) Elder, R.J. and R.D. Allen. 2003. A Longitudinal Field Investigation of Auditor Risk Assessments and Sample Size Decision. The
Accounting Review 78 (October): 983-1002.
(c) Johnstone, K.M. and J.C. Bedard. 2003. Risk Management in Client Acceptance Decisions. The Accounting Review 78 (October):
1003-1025.
(9) Client Bargaining Power: (Week #12
12/7) - Chou
(a) Reynolds, J., and J. Frances. 2001. Does size matter? The influence of large clients on office-level auditor reporting decision.
Journal of Accounting and Economics 30: 378-400.
(b) Larcker, D. and S. Richardson. 2004. Fee paid to audit firms, accrual choices, and corporate governance. Journal of Accounting
Research 42( June) : 625-658.
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(c) Gaver, J.J. and J.S. Paterson. 2007. The influence of large clients on office-level auditor oversight: Evidence from the
property-casualty insurance industry. Journal of Accounting & Economics 43: 299-320.
(10) Market Reactions to Audit Report: (Week #13
12/14)  Chou
(a) Ogneva, M. and K.R. Subramanyam. 2007. Does the stock market underact to going concern opinions? Evidence from the U.S.
and Australia. Journal of Accounting & Economics 43: 439-452.
(b) Lennox, Geiger and North. 2006. The hiring of accounting and finance officers from audit firms: How did the market react?
Working paper.
(c) Krishnamurthy, S., J. Zhou, and N. Zhou. 2006. Auditor reputation, auditor independence, and the stock-market impact of
Andersen’s indictment on its client firms. Contemporary Accounting Research 23(2): 465-490.
(11) Audit Production: (Week #14
12/21)  Chou
(a) Banker, R. D., H. Chang, and R. Cunningham. 2003. The public accounting industry production function. Journal of accounting &
Economics 35 (June): 255-281.
(b) Blokdijk, H., F. Drieenhuizen, D. Simunic, and M. Stein 2006. An analysis of cross-sectional differences in Big and non-Big public
accounting firms’ audit programs. Auditing: A Journal of Practice & Theory 25(1): 27-48.
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(c) O’ Keefe, T., D. Simunic, and M. Stein. 1994. The production of audit services: Evidence from a major public accounting firm.
Journal of Accounting Research 32 (2): 241-261
(12) Case Teaching:
 Chou
 Text books(Week #15 12/28):
(a) Mauffette-Leenders, L. A., J. A. Erskine, and M. R. Leenders. 2005. Learning with cases. Richard Ivey School of Business.
(b) Erskine, J. A., M. R. Leenders, and L. A. Mauffette-Leenders. 2003. Teaching with cases. Richard Ivey School of Business.
(c) Leeners, M. R.., L. A. Mauffette-Leenders , and J. A. Erskine. 2001. Writing cases. Richard Ivey School of Business.
 Discussion HBS cases:
A. Professionalism and sanction (Week #16 1/4)
(a) Financial Reporting Problems at Molex, Inc.
(b) 王金來會計師之訊碟經驗
B. Corporate Frauds (Week #17 1/11)
(c) Accounting Fraud at WorldCom
(d) The Enron Collapse
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