Stock market reactions to audit failure in Japan: The case of Kanebo and ChuoAoyama

International Journal of Accounting

Volumn 45, Issue 2, 2010, Pages 175-199

  Numata, Shingo ^a   Takeda, Fumiko ^a  

^a UNIVERSITY OF TOKYO   (Japan)

Author keywords

Audit quality; Auditor reputation; Event study; Monitoring; Spillover

Indexed keywords

EID: 77953121218     PISSN: 00207063     EISSN: None     Source Type: Journal    
DOI: 10.1016/j.intacc.2010.04.004     Document Type: Article

References (54)

1. Aoki M., Patrick H. The Japanese main bank system: Its relevance for developing and transforming economies 1995, Oxford University Press, London. M. Aoki, H. Patrick (Eds.).
2. Asthana S., Balsam S., Krishnan J. Audit firm reputation and client stock price reactions: evidence from the Enron experience. Working paper, presented at the 2004 Annual Meeting of the American Accounting Association 2003.
3. Balvers R., McDonald B., Miller R.E. Underpricing of new issues and the choice of auditor as a signal of investment banker reputation. The Accounting Review 1988, Vol. LXIII(4):605-622.
4. Baber W., Kumar K., Verghese T. Client security price reactions to the Laventhol and Horwath bankruptcy. Journal of Accounting Research 1995, Vol. 33(2):385-395.
5. Barry C.B., Muscarella C.J., Peavy J.W., Vetsuypens M.R. The role of venture capital in the creation of public companies. Journal of Financial Economics 1990, 27:447-471.
6. Beasley M.S. An empirical analysis of the relation between the board of director composition and financial statement fraud. The Accounting Review 1996, Vol. 71(4):443-465.
7. Beatty R.P. Auditor reputation and pricing of the initial public offerings. The Accounting Review 1989, Vol. LXIV(4):693-709.
8. Beatty R., Ritter J. Investment banking, reputation and underpricing of initial public offerings. Journal of Financial Economics 1986, 15:213-232.
9. Blackwell D.W., Marr M.W., Spivey M.F. Shelf registration and the reduced due diligence argument: implications of the underwriter certification and the implicit insurance hypotheses. Journal of Financial and Quantitative Analyses 1990, Vol. 25(2):245-259.
10. Booth J.R., Smith R.L. Capital raising, underwriting and the certification hypothesis. Journal of Financial Economics 1986, 15:261-281.
11. Brewer E., Genay H., Hunter W.C., Kaufman G.G. The value of banking relationships during a financial crisis: Evidence from failure of Japanese banks. Journal of the Japanese and International Economics 2003, Vol. 17:233-262.
12. Carter R.B., Manaster S. Initial public offerings and underwriter reputation. Journal of Finance 1990, Vol. 45(4):1045-1067.
13. Carter R.B. Underwriter reputation and repetitive public offerings. Journal of Financial Research 1992, 15(4):341-354.
14. Chaney P.K., Philipich K.L. Shredded reputation: The cost of audit failure. Journal of Accounting Research 2002, Vol. 40(4):1221-1245.
15. Clarkson P.M., Simunic D.A. The association between audit quality, retained ownership, and firm-specific risk in U.S. vs. Canadian IPO markets. Journal of Accounting and Economics 1994, Vol. 17:207-228.
16. Datar S.M., Feltham G.A., Hughes J.S. The role of audits and audit quality in valuing new issues. Journal of Accounting and Economics 1991, Vol. 14:3-49.
17. DeAngelo L.E. Auditor Size and Audit Quality. Journal of Accounting and Economics 1981, 3:183-199.
18. Dechow P.M., Sloan R.G., Sweeney A.P. Causes and consequences of earnings manipulation: An analysis of firms subject to enforcement actions by the SEC. Contemporary Accounting Research 1996, Vol. 13(1):1-36.
19. Doogar R., Sougiannis T., Xie H. Auditor credibility impairment spillovers: Evidence from three Andersen engagements. Working paper 2007.
20. Dye R.A. Auditing standards, legal liability, and auditor wealth. Journal of Political Economy 1993, Vol. 101(5):887-914.
21. Gibson M.S. Can bank health affect investment?: Evidence from Japan. Journal of Business 1995, Vol. 68:281-308.
22. Johnson J.M., Miller R.E. Investment banker prestige and the underwriting of initial public offerings. Financial Management 1988, Vol. 17(2):19-29.
23. Hirata M. Compliance and governance in large Japanese companies. Keieironshu 2004, 6c2:29-46.
24. Hoshi T., Kashyap A., Scharfstein D. The role of banks in reducing the costs of financial distress in Japan. Journal of Financial Economics 1990, Vol. 27:67-88.
25. Hoshi T., Kashyap A., Scharfstein D. Corporate structure, liquidity, and investment: Evidence from Japanese industrial group. Quarterly Journal of Economics 1991, Vol. 106:33-60.
26. Hoshi T., Kashyap A. Corporate financing and governance in Japan: The road to the future 2003, MIT Press, Cambridge.
27. Hoshi T., Kashyap A. Japan's economic and financial crisis: An overview. Journal of Economic Perspective 2003, Vol. 18(1):3-26.
28. Itami H. Revision of the commercial code and reform of the Japanese corporate governance. Japan Labor Review 2005, Vol. 2(1):4-25.
29. Khurana I.K., Raman K.K. Litigation risk and the financial reporting credibility of Big 4 versus non-Big 4 audits: Evidence from Anglo-American countries. The Accounting Review 2004, Vol. 79(2):473-495.
30. Kimura F., Yamamoto T., Tsujikawa N. Kigyo no Shikin Chotatsu to Kaikei Sousa (Corporate finance and accounting manipulation). Kaikei Sousa (Accounting Manipulation). Diamond-sha 2007, in Japanese. K. Suda, T. Yamamoto, S. Otomasa (Eds.).
31. Klein B., Leffler K.B. The role of market forces in assuring contractural performance. Journal of Political Economy 1981, Vol. 89(41):615-641.
32. Krishnamurthy S., Zhou N., Zhou J. Auditor reputation, auditor independence and the stock market impact of Andersen's indictment on its client firms. Contemporary Accounting Research 2006, Vol. 23:465-490.
33. Lennox C.S. Audit quality and auditor size: An evaluation of reputation and deep pockets hypotheses. Journal of Business Finance & Accounting 1999, Vol. 26(7 & 8):779-805.
34. MacKinlay C.A. Event studies in economics and finance. Journal of Economic Literature 1997, Vol. 35:13-39.
35. Megginson W.L., Weiss K.A. Venture capitalist certification in initial public offering. Journal of Finance 1991, Vol. XLVI(3):879-903.
36. Menon K., Williams D.D. The insurance hypothesis and market prices. The Accounting Review 1994, Vol. 69(2):327-342.
37. Patrick H. Evolving corporate governance in Japan. Working Paper No. 220, Center on Japanese Economy and Business, Columbia Business School 2004.
38. Piot C. Auditor reputation and model of governance: A comparison of France, Germany and Canada. International Journal of Auditing 2005, Vol. 9(2):21-44.
39. Rauterkus S.Y., Song K. Auditor's reputation and equity offerings: The case of Arthur Andersen. Financial Management 2005, Vol. 34(4):121-135.
40. Shapiro C. Premiums for high quality products as returns to reputations. Quarterly Journal of Economics 1983, Vol. 98(4):659-680.
41. Sheard P. The main bank system and corporate monitoring and control in Japan. Journal of Economic Behavior and Organization 1989, Vol. 11:399-422.
42. Sheard P. Reciprocal delegated monitoring in the main bank system. Journal of the Japanese and International Economies 1994, Vol. 8(1):1-21.
43. Sheard P. Bank executives on Japanese corporate boards. Bank of Japan Monetary and Economic Studies 1994, Vol. 12(2):85-121.
44. Shleifer A., Vishny R.W. A survey of corporate governance. Journal of Finance 1997, Vol. 52(2):737-783.
45. Simunic D.A. The pricing of audit services: Theory and evidence. Journal of Accounting Research 1980, Vol. 18(1):161-190.
46. Suda K. Funshoku Kessan to Kaikei Sousa no Shoyou (Accounting fraud and manipulation). Kaikei Sousa (Accounting Manipulation). Diamond-sha 2007, in Japanese. K. Suda, T. Yamamoto, S. Otomasa (Eds.).
47. Takeda F., Saito Y. International spillovers of auditor credibility impairment: The evidence from the U.S. and Japanese audit failures. Working paper 2009.
48. Teoh S.H., Wong T.J. Perceived auditor quality and the earnings response coefficient. The Accounting Review 1993, Vol. 68(2):346-366.
49. Teranishi J. Evolution of the economic system in Japan 2005, Edward Elgar, Cheltenham.
50. Titman S., Trueman B. Information quality and the valuation of new issues. Journal of Accounting and Economics 1986, Vol. 8:159-172.
51. Venkataraman R., Weber J., Willenborg M. Litigation risk, audit quality, audit fees: Evidence from initial public offerings. The Accounting Review 2008, Vol. 83(5):1315-1346.
52. Weber J., Willenborg M., Zhang J. Does auditor reputation matter?: The case of KPMG Germany and Comroad AG. Journal of Accounting Research 2008, Vol. 46(4):941-972.
53. Willenborg M. Empirical analysis of the economic demand for auditing in the initial public offerings. Journal of Accounting Research 1999, Vol. 37(1):225-238.
54. Yamori N., Murakami A. Does bank relationship have an economic value?: The effect of main bank failure on client firms. Economics Letters, Vol. 1999, Vol. 65:115-120.