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Beschreibung:
This dissertation comprises four articles. The first three articles analyze auditing research questions using analytical models. The fourth article uses an experimental empirical research method to analyze the rationalization of misreporting. The first article analyzes how enforcement institutions’ inspection focus disclosure influences the managers’ misreporting, the auditors’ effort choices, and thus the financial reporting quality. We, thereby, show that focus disclosure can enhance or deteriorate financial reporting quality. We also highlight conditions under which focus disclosure can yield a higher financial reporting quality and how enforcement institutions can influence these conditions. The second article analyzes how third-party auditor hiring (e.g., by a stock exchange) affects entrepreneurs’ misreporting choices and overall investment efficiency. I show that even though independence issues could be solved, third-party auditor hiring can enhance or deteriorate investment efficiency. Third-party hiring can harm investment efficiency as it reduces misreporting, and thus, misreporting cannot be used to compensate a conservative accounting system to prevent underinvestment. Further, I highlight conditions under which third-party hiring yields a higher or lower investment efficiency. The third article analyzes driving forces for audit firm split-ups into stand-alone audit and advisory firms, such as the once planned EY split-up. In addition, we explore the potential consequences of audit firm split-ups on audit quality and the role of enforcement strength. We find that three effects determine split-up preferences and its consequences: First, as the advisory partner wants to prevent an adverse audit opinion to keep the client, independence problems arise. Second, as the advisory partner loses reputation in case of an audit failure, an advisory project creates positive effort incentives. Third, spillovers from audit to advisory lower the advisory partner’s project costs. Enforcement strength, thereby, ...