Client Workplace Environment and Corporate Audits
53 Pages Posted: 24 Jan 2017 Last revised: 16 Oct 2021
Date Written: October 27, 2016
We obtain a novel dataset of workplace satisfaction ratings submitted by about 100,000 employees working for large public U.S. companies. We document that lower workplace ratings are associated with higher audit fees and longer audit report lags. Lower workplace ratings also increase the likelihood of firms receiving modified going concern opinions. Our study shows that organizational workplace environments affect auditor risk assessments and auditing outcomes and provide insights for practicing auditors and corporate executives. Our interviews with practicing auditors at large U.S. accounting firms also provide insights as to how workplace quality affects the corporate audit.
Keywords: workplace environment, audit fees, going concern opinions, audit report lag
JEL Classification: G3, J28, M14, M42
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