Research

Research highlights

The Path to Partner

Professor Beau Barnes’ research, “Partner-Track Aspirations in Public Accounting: Comparisons between Partners and Nonpartners,” examines the path to partnership at public accounting firms. The paper highlights how partners’ attitudes and values differ from those of their employees, and it underscores the need for CPA firms to address specific issues to promote more balanced leadership and gender equity at the partner position.

Audit Committees

The buck stops with the audit committee when it comes to ensuring a company provides high quality disclosures to financial markets. Financial reporting oversight is the audit committee’s main job, but many committees are asked to do other unrelated oversight tasks, like overseeing risk management. In “Are Audit Committees Overloaded?” Professor Jacob Jaggi shows that overloading audit committees in this way can impair their oversight and result in lower quality disclosures to investors. But all is not lost! Audit committees can improve the effectiveness of their oversight by relying on input and help from an internal audit function.

Auditing: A Journal of Practice & Theory

Professor Jacob Jaggi’s newest research “Auditor Communication Provisions in Private Loan Agreements: Do They Matter?” examines the auditor communication provisions (ACPs) in private loan agreements, which are private contracting mechanisms establishing communication between lenders and their borrowers’ auditors. We provide evidence that lenders value auditor communications and often specify different types of ACPs that facilitate lender monitoring. With predictable variation across the different ACP types, ACPs are associated with larger loans, longer maturities, larger loan syndicates, more financial covenants, and greater slack in financial covenants. In examining audit effort implications for borrowers, we find that ACPs are associated with higher audit fees and longer audit report lags. This is consistent with auditors responding to the litigation risk ACPs impose. In samples where the risk of third-party litigation is greater, the association between ACPs and audit effort proxies is heightened, suggesting the increased litigation risk brought about by ACPs interacts with other audit client-specific risk factors.

Multifaceted Concept of Diversity

Professor Kat Harris’ research explores the multifaceted concept of diversity in the auditing profession, focusing on dimensions such as gender, social identity, and professional experience, all of which significantly impact both data reporting and the audit process. A series of studies, Gender equity in public accounting: Evidence from single audit partner and director engagement leaders and Partner Gender Differences in Prestige of Clients Served at the Largest U.S. Audit Firms, reveal gender inequities at partnership levels in public accounting. Whereas as study using the context of COVID-19 data reporting, Accounting for Partisanship and Politicization: Employing Benford’s Law to Examine Misreporting of COVID-19 Infection Cases and Deaths in the United States, finds data credibility issues potentially influenced by political identity. When examining professional experience, Does Task-Specific Knowledge Improve Audit Quality: Evidence from Audits of Income Tax Accounts, explores how tax specific knowledge evolves into expertise that enhances the audit process.

Cheating for the Cause

Professor Ryan Sommerfeldt’s research, “Cheating for the Cause: The Effects of Performance-Based Pay on Socially Oriented Misreporting,” examines the effect of performance-based pay on misreporting intended to benefit a social mission. While performance-based pay typically leads to a greater level of misreporting, across three experiments the paper demonstrates that performance-based pay decreases people’s propensity to misreport for a social mission.

Auditing Non-GAAP Measures

Professor Ryan Sommerfeldt’s research, “Auditing Non-GAAP Measures: Signaling More Than Intended,” examines how investors respond when more informative and less informative non-GAAP measures are audited. The paper highlights that by auditing a non-GAAP measure, investors rely on the measure in their investment decisions even if the measure is less informative and should not be used in investment decisions.

ChatGPT and Accounting Education

Professor Ryan Sommerfeldt participated in the first crowd-sourced research project in accounting, “The ChatGPT Artificial Intelligence Chatbot: How Well Does It Answer Accounting Assessment Questions?” created by a team of 327 coauthors. The paper assesses how well ChatGPT performs on accounting assessment questions. Findings indicate that ChatGPT underperformed accounting students and highlight in which areas ChatGPT performs better and worse.

529 College Savings Plans

Professor Richard Toolson’s research, “The Unique Benefits of 529 College Savings Plans,” was recently published as the headline article in the May 2023 issue of The Tax Adviser (the tax journal of the American Institute of Certified Public Accountants). The article discusses the many tax-planning advantages of Section 529 plans, addresses recent tax developments that have expanded the definition of tax-free qualified educational distributions from these plans, and compares a 529 plan to a Roth IRA as a funding source for higher education.

Topics

Scholarly research in the Department of Accounting spans the following topics:

• Accounting ethics
• Accounting information and the stock market
• Auditing
• Auditors’ risk assessment and planning systems
• Business law (including cyberlaw, intellectual property ownership on the Internet, and legal history)
• Capital markets and disclosure issues
• Cost measurement
• Federal income taxation
• Financial accounting
• Governmental and non-profit accounting
• Healthcare
• Judgment and decision-making processes
• Managerial/cost accounting
• Retirement planning
• Tax accounting
• Taxation of investments