Accounting and Finance Seminars: Dr Simon Fung

17 February 2016, 4.00 PM - 17 February 2016, 5.30 PM

Dr Simon Fung (Hong Kong Polytechnic)

G.15, 15-19 Tyndalls Park Road

Title: Does the PCAOB's International Inspection Program Improve Audit Quality for Non-US-listed Foreign Companies?


We examine whether the PCAOB international inspection program improves audit quality for a sample of non-US-listed foreign public companies from 55 countries audited by foreign (i.e. non-US) auditors. Specifically, for a sample of non-US-listed foreign clients of PCAOB-registered foreign auditors, we find the initial (actual) PCAOB inspections to have a salutary effect on audit quality over and above the threat of such inspections. Our findings suggest that the PCAOB international inspection program has a positive externality, i.e., actual PCAOB inspections improve audit quality not only for foreign audit firms’ US-listed clients but also for their non-US-listed foreign clients. Our findings are of potential interest to the Board (as well as audit regulators overseas) in documenting the benefits of PCAOB international inspections for foreign investors in non-US-listed foreign companies thereby increasing the acceptability of the PCAOB’s international inspection program abroad.


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