City Research Online

Auditing and Regulations

Pettinicchio, A.K. (2011). Auditing and Regulations. (Unpublished Doctoral thesis, City University London)


Effective financial reporting has become of critical importance in our economic markets and the international accounting scandals of the last decades have accentuated the role of auditing in protecting stakeholders' interests and contributing to an efficient functioning of financial markets. Auditing regulation has been at the centre of recent international debates (e.g. EU Green paper; 2010) and different regulatory interventions have been put in place in different countries and in different periods of time. From a theoretical point of view, there is a broad spectrum of regulatory choices that legislators could take, the extremes being self-regulation and government direct interventions. My empirical works focus on two extreme examples of how regulation may interact with auditing processes with the ultimate objective of improving financial information and therefore enhancing the effectiveness of financial markets. In one case, I analyze whether an example of enforced audit self-regulation is effective in improving audit quality and ultimately, reporting quality. In particular, I analyze the mandatory audit rotation rule, i.e. the rule imposing the change of the auditor after a specified period of time, as a potential means to increase auditor independence and therefore audit and reporting quality. I then study a case of direct monitoring activity on reporting quality carried out by a supervising body, namely the SEC in the U.S., and how this interacts and influences audit processes. The evidence collected may be useful to legislators in order to understand the potential effects of different audit regulatory choices and therefore to effectively address the need of high-quality auditing which strongly characterize our economic markets especially after the financial and accounting scandals.

Publication Type: Thesis (Doctoral)
Subjects: H Social Sciences > HG Finance
Departments: Bayes Business School > Finance
Doctoral Theses
Bayes Business School > Bayes Business School Doctoral Theses
Text - Accepted Version
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