Nargess Golshan presented her paper, co-authored with Monika Causholli and PhD student Mark Cheng at the 3rd Annual Labor Accounting Group Conference held at UT Dallas.
The paper is titled “Does Working from Home Impact Audit Quality? Evidence from Non-Pharmaceutical Interventions during COVID-19.”
Abstract: Catalyzed by the COVID-19 pandemic, many audit firms have announced large-scale plans to adopt working from home (WFH) policies. It is unclear whether and how this emerging work arrangement would affect audit quality. Exploiting county-level non-pharmaceutical interventions (e.g., shelter-in-place orders and lock downs) that exogenously increased local auditors’ WFH practices, this paper documents that WFH is associated with higher audit quality. Specifically, using a generalized difference-in-differences research design, we show that auditors’ adoption of WFH policies resulted in a lower likelihood of non-reliance restatements, lower discretionary accruals, and a higher likelihood of going-concern opinions. These results are stronger among Big 4 auditors and clients with less tangible assets. Further, audit fees are higher and audit report delay is longer among auditors impacted by WFH policies. Overall, the findings advance our understanding of the implication.
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