Working paper
Launch of Public Accounting Offshoring and Financial Reporting Quality
SSRN
02/13/2024
DOI: 10.2139/ssrn.4705489
Abstract
I study the effects of public accounting offshoring on financial reporting quality. Over the past two decades, public accounting firms have fundamentally modified their business models by offshoring a large portion of U.S. audit and tax work to shared services centers in India. Despite this major shift, we have almost no evidence of its effects on firms’ financial reporting. A stacked cohort difference-in-differences design with entropy balancing suggests the launch of an offshore model decreases financial reporting quality through increased restatements, particularly revision restatements. I also find that offshoring marginally decreases tax reporting quality. In analyses of the intended consequences of offshoring, I find the counterintuitive result that the launch of an offshoring model is associated with increases to client fees as well as increases to the audit firm’s local industry market share, client count and tax planning effectiveness. Together, my results suggest that offshoring leads to some initial lapses in quality, a finding that should interest regulators, practitioners, shareholders and managers.
Details
- Title: Subtitle
- Launch of Public Accounting Offshoring and Financial Reporting Quality
- Creators
- Kaitlyn Kroeger - The University of Texas at Austin
- Resource Type
- Working paper
- DOI
- 10.2139/ssrn.4705489
- Publisher
- SSRN
- Number of pages
- 50 pages
- Alternative title
- Consequences of Public Accounting Offshoring
- Language
- English
- Date posted
- 02/13/2024
- Date updated
- 09/30/2024
- Academic Unit
- Accounting
- Record Identifier
- 9984937925802771
Metrics
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