【公开学术报告】Foreign regulatory oversight as an agent of change

Foreign regulatory oversight as an agent of change: The spillover audit quality benefit of PCAOB international inspections for non-registered auditors

Dr. Yiye Liu (PolyU Hong Kong)

Date & Time: Fri. 14th, March 2025, from 10:00 AM to 11:30 AM (Beijing Time)

Zoom Meeting ID:  88631828704 (Password: 918491)

Join via the Link: https://us02web.zoom.us/j/88631828704

ABSTRACT

We examine whether foreign regulatory oversight can serve as a change agent for market participants not directly subject to such foreign oversight. Specifically, we examine whether the US Public Company Accounting Oversight Board’s (PCAOB’s) initial inspection of one or more non-US auditors subject to PCAOB oversight in a country can serve as an avenue for improving audit quality for non-inspected auditors in that country (including auditors not subject to PCAOB oversight). Given that high quality audits are an important element in good corporate governance, our findings suggest a spillover governance benefit from the initial PCAOB international inspection in a country of one or more auditors subject to PCAOB oversight for the broader country-level audit market. The spillover audit quality benefit is stronger in countries with more competitive audit markets. It is also stronger for non-inspected auditors with multinational enterprise (MNE) clients and in countries with greater exposure to international business. Our findings of foreign regulatory oversight as a change agent are interesting and of potential interest not only to academics but also to the PCAOB, other national audit regulators, corporate managers and investors.

Keywords: PCAOB international inspections; non-US auditors; non-US audit markets; spillover audit quality benefit for non-inspected auditors.