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Auditor conservatism and voluntary disclosure: Evidence from the Year 2000 systems issue

Author

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  • Peter M. Clarkson
  • Colin Ferguson
  • Jason Hall

Abstract

This study further examines the phenomenon of conservative auditor behaviour by considering the level of voluntary disclosure of Year 2000 remediation information in company annual reports. Previous studies have provided evidence of conservative auditor behaviour by examining the link between Big 6 auditor choice and accruals (Francis and Krishnan 1999; Becker et al., 1998; Defond and Subramanyam 1998). Protecting their reputation capital increases Big 6 auditor incentives to act conservatively to avoid litigation risk. We propose and find that Big 6 auditor clients disclose more Year 2000 remediation information than non–Big 6 auditor clients.

Suggested Citation

  • Peter M. Clarkson & Colin Ferguson & Jason Hall, 2003. "Auditor conservatism and voluntary disclosure: Evidence from the Year 2000 systems issue," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 43(1), pages 21-40, March.
    • Handle: RePEc:bla:acctfi:v:43:y:2003:i:1:p:21-40
    DOI: 10.1111/1467-629X.00081
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    Cited by:

    1. Axelsen, Micheal & Green, Peter & Ridley, Gail, 2017. "Explaining the information systems auditor role in the public sector financial audit," International Journal of Accounting Information Systems, Elsevier, vol. 24(C), pages 15-31.
    2. Richard Anthony Kent & Di Bu, 2020. "The importance of cash flow disclosure and cost of capital," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(S1), pages 877-908, April.
    3. De George, Emmanuel T. & Li, Xi & Shivakumar, Lakshmanan, 2016. "A review of the IFRS adoption literature," LSE Research Online Documents on Economics 67599, London School of Economics and Political Science, LSE Library.
    4. Peter Clarkson & Ami Lammerts Van Bueren & Julie Walker, 2006. "Chief executive officer remuneration disclosure quality: corporate responses to an evolving disclosure environment," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 46(5), pages 771-796, December.
    5. Hongwen Han & Jiali Jenna Tang & Qingquan Tang, 2021. "Goodwill Impairment, Securities Analysts, and Information Transparency," European Accounting Review, Taylor & Francis Journals, vol. 30(4), pages 767-799, August.
    6. Philip D. Palmer, 2008. "Disclosure of the impacts of adopting Australian equivalents of International Financial Reporting Standards," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 48(5), pages 847-870, December.
    7. Rogério Marques Serrasqueiro & Tânia Sofia Mineiro, 2018. "Corporate risk reporting: Analysis of risk disclosures in the interim reports of public Portuguese non-financial companies," Contaduría y Administración, Accounting and Management, vol. 63(2), pages 25-26, Junio.
    8. Amina Zgarni & Hassouna Fadhila & Moez El Gaied, 2018. "Audit Committee and Discretionary Loan Loss Provisions in Tunisian Commercial Banks," International Journal of Business and Management, Canadian Center of Science and Education, vol. 13(3), pages 169-169, February.
    9. Al-Hadi, Ahmed & Taylor, Grantley & Hossain, Mahmud, 2015. "Disaggregation, auditor conservatism and implied cost of equity capital: An international evidence from the GCC," Journal of Multinational Financial Management, Elsevier, vol. 29(C), pages 66-98.
    10. El’fred Boo & Divesh Sharma, 2008. "Effect of regulatory oversight on the association between internal governance characteristics and audit fees," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 48(1), pages 51-71, March.
    11. Sophie Audousset-Coulier, 2008. "Les déterminants de la publication volontaire des honoraires d'audit par les sociétés cotées françaises en 2002 et 2003," Post-Print halshs-00522305, HAL.
    12. Peter M. Clarkson & Allen Craswell & Prue Mackenzie, 2008. "The Effect of Board Independence on Target Shareholder Wealth," Australian Accounting Review, CPA Australia, vol. 18(2), pages 135-148, June.
    13. Ahmadi Ali & Bouri Abdelfettah, 2019. "Financial Disclosure Information, Board of Directors, and Firm Characteristics among French CAC 40 Listed Firms," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 10(3), pages 941-957, September.
    14. Michael Seamer, 2014. "Does Effective Corporate Facilitate Continuous Market Disclosure?," Australian Accounting Review, CPA Australia, vol. 24(2), pages 111-126, June.
    15. Zoltan Matolcsy & Jonathan Tyler & Peter Wells, 2012. "Is continuous disclosure associated with board independence?," Australian Journal of Management, Australian School of Business, vol. 37(1), pages 99-124, April.
    16. Pamela Kent & Tamara Zunker, 2017. "A stakeholder analysis of employee disclosures in annual reports," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 57(2), pages 533-563, June.
    17. Ahmadi, Ali & Nakaa, Nejia & Bouri, Abdelfettah, 2018. "Chief Executive Officer attributes, board structures, gender diversity and firm performance among French CAC 40 listed firms," Research in International Business and Finance, Elsevier, vol. 44(C), pages 218-226.
    18. Pamela Kent & Jenny Stewart, 2008. "Corporate governance and disclosures on the transition to International Financial Reporting Standards," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 48(4), pages 649-671, December.
    19. An, Yi & Davey, Howard & Eggleton, Ian R.C. & Wang, Zhuquan, 2015. "Intellectual capital disclosure and the information gap: Evidence from China," Advances in accounting, Elsevier, vol. 31(2), pages 179-187.
    20. Ahmed, Ammad & Monem, Reza M. & Delaney, Deborah & Ng, Chew, 2017. "Gender diversity in corporate boards and continuous disclosure: Evidence from Australia," Journal of Contemporary Accounting and Economics, Elsevier, vol. 13(2), pages 89-107.
    21. Syaiful Ali & Peter Green, 2012. "Effective information technology (IT) governance mechanisms: An IT outsourcing perspective," Information Systems Frontiers, Springer, vol. 14(2), pages 179-193, April.
    22. Emmanuel T. De George & Xi Li & Lakshmanan Shivakumar, 2016. "A review of the IFRS adoption literature," Review of Accounting Studies, Springer, vol. 21(3), pages 898-1004, September.

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