Date of Award
PhD in Accountancy
Department of Accountancy
Gopal V. Grishnan
This dissertation is comprised of three papers that integrate analyses of health, health crises, and healthcare entities in the financial reporting and audit processes. The first paper considers how physical health influences audit outcomes via auditors’ cognitive processing. The second paper considers a global health disruption that impacts the audit process. In the third paper, I examine financial and tax reporting of hospital entities. I describe each paper in further detail below.
The first paper, co-authored with Rani Hoitash, examines whether influenza (flu), a potential threat to the conduct of public company audits, is associated with audit outcomes. Because the peak months of flu season overlap with audit busy season, audit offices most impacted by the flu may be adversely affected. The demanding nature of audit busy season and the culture of audit firms may compel employees to go to work sick, a phenomenon known as presenteeism. When auditors go to work with flu-like symptoms, cognitive functioning is impaired. This impairment may influence auditors’ ability to exercise judgment and professional skepticism, leading to adverse outcomes. Using data collected from the Centers for Disease Control and Prevention (CDC) we find that the filing of audit reports is delayed and audit quality suffers in audit offices most impacted by the flu. The observed effects of health impairments on company outputs have broad implications for both the audit profession and workplaces as a whole.
The second paper, co-authored with Rani Hoitash and Udi Hoitash, examines the likelihood and consequences of late filings during COVID-19. The COVID-19 pandemic introduced unprecedented challenges to the audits of public companies. In response, the SEC made available a unique one-time 45-day extension to file the audited annual report. We leverage the first year of the pandemic, in which audits completed prior to the national emergency serve as a control group, to execute a difference-in-differences design. We observe a significant increase in the likelihood of a late filing during the pandemic. We further manually identify late filings that are attributable to the auditor. Utilizing this data, we observe a decline in audit quality only when the delay is not attributed to the auditor, indicating that auditor-provoked delays are effective in maintaining quality. Additionally, while we observe an increase in the number of new modified going concern opinions, we also observe a decline in the number of Type I going concern errors made by auditors during the pandemic. Our study informs regulators about the impact of the unprecedented SEC filing extensions.
The third paper, sole-authored, focuses on reporting by a healthcare entity: hospitals. This paper examines extant research on hospital reporting and offers suggestions for future research. Early hospital studies have compared and evaluated financial reporting and other outcomes between different hospital ownership types, while more recent research has focused on non-profit hospital reporting. Within the latter topic, I synthesize studies that examine tax-exemption, its benefits, audits, and the competing incentives of non-profit management. For each subsection, I identify potential data sources and future research opportunities. I conclude that there is ample opportunity for meaningful research in this field of the nonprofit and accounting literatures.
Morris, Landi, "Health and Healthcare in the Financial Reporting and Audit Environments". 2022. 6.