Date of Award

2025

Document Type

Dissertation

Degree Name

PhD in Accountancy

Department

Department of Accountancy

First Advisor

Rani Hoitash

Second Advisor

Ari Yezegel

Third Advisor

Udi Hoitash

Abstract

Enhancing transparency and coordination in global auditing is increasingly critical as financial markets become more interconnected. My dissertation examines how regulatory fragmentation and uncertainty shape cross-border audit practices and outcomes. Through three related studies, I explore the effects of economic and political uncertainty, regulatory tension, and global audit network structures on audit-related decisions and consequences. The first paper is a literature review that synthesizes findings from over 40 empirical studies on how economic and political uncertainty affect financial reporting, capital markets, and auditor behavior. Motivated by the rise of uncertainty indices—such as the Economic Policy Uncertainty (EPU) Index (Baker et al., 2016) and firm-level measures (Hassan et al., 2019)—the paper identifies consistent evidence that uncertainty influences earnings management, disclosure decisions, financing behavior, and audit viii practices. The review also highlights emerging themes such as the spillover effects of uncertainty across borders and offers a research agenda to guide future work in this area. The second paper provides empirical evidence of how cross-border audit regulation impacts investor behavior and firm decisions. We study the Holding Foreign Companies Accountable Act (HFCAA), which threatened to delist Chinese issuers whose auditors could not be inspected by the PCAOB. During the ensuing regulatory standoff, Chinese issuers engaged in costly strategic responses—including obtaining secondary listings and switching auditors—to reduce perceived delisting risk. We find that investors responded negatively to U.S. regulatory announcements and positively to media speculation, while largely disregarding statements from Chinese regulators. Market reactions were stronger for firms with greater exposure to delisting consequences, suggesting that uncertainty surrounding international audit oversight imposes real economic costs. The third paper examines how global audit network structures shape auditor selection and audit outcomes in U.S.-led multinational engagements. Using Form AP and geographic segment data, I show that lead auditors overwhelmingly default to using their network affiliate, even when the affiliate is not the strongest local provider. I find that affiliate use is associated with improved audit outcomes, particularly when affiliates have relevant PCAOB experience or industry expertise. However, network-based constraints can limit optimal auditor matching, raising broader questions about coordination and efficiency in global auditing.

Download

Share

COinS