Articles scientifiques

Media bias and the persistence of the expectation gap: An analysis of press articles on corporate fraud

J. COHEN, Y. DING, C. LESAGE, H. STOLOWY

Journal of Business Ethics

septembre 2017, vol. 144, n°3, pp.637-659

Départements : Comptabilité et Contrôle de Gestion, GREGHEC (CNRS)

Mots clés : Expectation gap, Media bias, Corporate fraud, Management behavior, Press, Fraud-related professional standards

https://link.springer.com/article/10.1007/s10551-015-2851-6


Prior research has documented the continued existence of an expectation gap, defined as the divergence between the public’s and the profession’s conceptions of auditor’s duties, despite the auditing profession’s attempt to adopt standards and practices to close this gap. In this paper, we consider one potential explanation for the persistence of the expectation gap: the role of media bias in shaping public opinion and views. We analyze press articles covering 40 U.S. corporate fraud cases discovered between 1992 and 2011. We compare the auditor’s duties, described by the auditing standards, with the description of the fraud cases as found in the press articles. We draw upon prior research to identify three sources of the expectation gap: deficient performance, deficient standards, and unreasonable expectations. The results of our analysis provide evidence that (1) the performance gap can be reduced by strengthening auditor’s willingness and ability to apply existing auditing standards concerning fraud detection; (2) the standards gap can be narrowed by improving existing auditing standards; and (3) unreasonable expectations, however, involve elements beyond the profession’s sphere of control. As a result, the expectation gap is unlikely to disappear given the media’s tendency to bias, with an overemphasis of unreasonable expectations in their coverage of frauds and press articles tending to reinforce the view that the auditor should take more responsibility for detecting fraud, irrespective of whether this is feasible at a reasonable cost. In addition to the primary role of the press in perpetuating the expectation gap, a second reason for continuation of the expectation gap is that the rational auditor will have difficulty in assessing subjective components of fraudulent behavior.

The Effect of Business and Financial Market Cycles on Credit Ratings: Evidence from the Last Two Decades

G. LOBO, L. PAUGAM, H. STOLOWY, P. ASTOLFI

Abacus

mars 2017, vol. 53, n°1, pp.59-93

Départements : Comptabilité et Contrôle de Gestion, GREGHEC (CNRS)

Mots clés : Business cycles; Credit rating agencies; Financial marketcycles; Investor reaction


We analyze the effect of business and financial market cycles on creditratings using a sample of firms from the Russell 3000 index that are ratedby Standard and Poor’s over the period 1986–2012. We also examine inves-tor reaction to credit rating actions in different stages of business andfinancial market cycles. We document that credit rating agencies areinfluenced by business and financial market cycles; they assign lower creditratings during downturns of business and financial market cycles andhigher ratings during upturns. Our study is the first to find strong evidenceof pro-cyclicality in credit ratings using a long window. We also documentstronger investor reaction to negative credit rating actions during down-turns. Our results confirm theoretical predictions and inform regulators

The Effect of Joint Auditor Pair Composition on Audit Quality: Evidence from Impairment Tests

G. LOBO, L. PAUGAM, D. ZHANG, J.-F. CASTA

Contemporary Accounting Research

Spring 2017, vol. 34, n°1, pp.118-153

Départements : Comptabilité et Contrôle de Gestion, GREGHEC (CNRS)

Mots clés : Joint Audits, Audit Quality, Auditor Independence, Impairment Testing, Conservatism


Budgeting in times of economic crisis

S. BECKER, M. MAHLENDORF, U. SCHÄFFER, M. THATEN

Contemporary Accounting Research

Winter 2016, vol. 33, n°4, pp.1489–1517

Départements : Comptabilité et Contrôle de Gestion, GREGHEC (CNRS)

Mots clés : Budgeting, budgeting functions, economic crisis, crisis management

http://ssrn.com/abstract=2605359


This paper examines how corporate reliance on budgets is affected by major changes in the economic environment. We combine survey and archival data from the economic crisis that began in 2008. The results indicate that, as a result of the economic crisis, budgeting became more important for planning and resource allocation but less important for performance evaluation. Additional evidence from interviews and data gathered in a focus group further illustrate these results and show the changes organizations have introduced to respond to the economic crisis. Taken together, and contrary to more general conclusions from the literature such as an overall increase or decrease in the importance of budgeting, we find that companies emphasize certain budgeting functions over others during economic crises

Disciplinary practices in the French auditing profession

C. LESAGE, G. HOTTEGINDRE, C. R. BAKER

Accounting, Auditing and Accountability Journal

2016, vol. 29, n°1, pp.11-42

Départements : Comptabilité et Contrôle de Gestion

Mots clés : Content analysis, Audit quality, Auditing, Disciplinary practices, Public accounting profession, Public interest


Purpose – The purpose of this paper is to contribute to understand the role of the statutory auditing profession in France. The study is theoretically based on distinctions between a functionalist view of professions and a neo-weberian view. Prior research, conducted in Anglo-American countries has shown that the auditing profession has focussed primarily on protecting the private interests of the profession. Hence, there is a need to conduct research on this topic in a code law country where the state is expected to play a significant role in protecting the public interest.Design/methodology/approach – The methodology involves a content analysis of 148 disciplinary decisions issued against statutory auditors in France from 1989 to 2006. This analysis identified 21 types of violations grouped into public interest or private interest offences. Because visible offences are public and are more likely to threaten the reputation of the profession, these types of decisions are also studied with respect to their visibility.Findings – The results reveal that in a code law country such as France the auditing profession tends to defend both the public interest as well as its private interests. The results also support the “visibility” effect.Research limitations/implications – The written disciplinary decisions have been anonymized so that the names of the auditors and the clients cannot be identified.Originality/value – This paper differs from previous studies conducted in the Anglo-American context which show an emphasis on protecting the private interests of the auditing profession. Moreover, this study reveals the existence of “mixed” offences and underlines that a profession primarily focusses on these cases. Thus, the work reconciles in part the functionalist and neo-weberian perspectives. Lastly, this paper confirms the importance of the visibility effect


JavaScriptSettings