Dahlia Robinson

New Evidence on Auditor Independence Policy

Abstract Auditor independence has been extensively examined from the perspective of independence in appearance, driven by the perception that the provision of non-audit services (NAS) leads to the diminution of auditor independence as well as appearance. This study reports on experimental laboratory research using experienced auditors and finds, similar to archival studies, that independence in fact is not compromised by NAS. On the contrary, our results suggest that greater NAS associates with more conservative auditor going-concern judgments among more experienced auditors. One explanation is that greater NAS associates with documented firm-performance deficiencies and experienced auditors recognize that association and respond accordingly.

The Information Content of Reverse Stock Splits

Abstract This chapter investigates whether abnormal reverse split announcement returns are related to information about earnings. I find that abnormal announcement returns are negative on average and significantly correlated with unexpected earnings in the years prior to, and subsequent to the reverse split event. I also find that analyst earnings forecasts are revised downwards after reverse split announcements and that these forecast revisions are correlated with abnormal announcement returns. Finally, I document a significant decrease in earnings response coefficients (ERC) after the reverse split announcements. These results suggest that reverse splits provide information about the permanence of past and future earnings performance.