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The research presents two competing views on the welfare effects of occupational licensing. One stream of literature suggests that licensing is a barrier to entry into professions, limiting competition and resulting in economic rents. A second stream suggests that they can increase well-being by alleviating information problems. We use data on CPAs’ salaries before and after certification to test these conflicting hypotheses. Consistent with the information-alleviation hypothesis, we find a positive correlation between performance on the CPA exam and auditors’ salaries after the exam but not before the exam when the competencies have developed. Furthermore, we find that the positive association is stronger for auditors working at Big 4 firms, younger auditors and male auditors. The abovementioned results indicate that auditors’ technical competencies are valued more highly by Big 4 firms than by non-Big 4 firms. After the CPA certification, we do not observe salary increases that are greater than expected based on previous years’ increases and auditors’ performance on the CPA exam, as the barrier-to-entry theoretical approach suggests. We discuss the implications of the results for the role of CPA regulation.

I såväl den politiska som juridiska debatten förekommer påståenden om revisorns betydelse för att stävja ekonomisk brottslighet och skatteundandragande. Dessa påståenden har genom åren kommit att bli självklara och ett återkommande mantra utan närmare förklaring. Vilken betydelse har egentligen revisorn för att få mindre aktiebolag som idag inte måste ha revisor att betala skatt?

This article provides evidence of the relations between disclosures in the management report of conditions that could challenge the continuance of operations, auditors’ going concern reporting, and the likelihood of bankruptcy for privately held firms in an environment characterized by low litigation risk. We conduct a matched case-control study using data for 125 firms filing for liquidation bankruptcy and 125 non-bankrupt firms. The results show that disclosures in the management report and auditors’ going concern modifications are positively associated with the likelihood of bankruptcy and that their predictive ability is incremental to the control factors. Despite the lower litigation pressure facing private Swedish firms, the informational value of going concern disclosures is comparable with those in litigious environments. 

We study how entrepreneurs’ attitudes toward risk, as measured by their personal legal infractions, are related to information asymmetry and agency problems prior to bankruptcy, using a sample of 260 small Swedish firms. We find that auditor resignations are more likely in firms where entrepreneurs have legal infractions. Furthermore, we find that legal infractions are negatively related to the likelihood of a firm disclosing its annual report and the quality of the bookkeeping, suggesting that information asymmetry problems are more severe when the entrepreneurs have legal infractions. We also find that creditors’ recovery rates in bankruptcy are lower if the entrepreneurs have legal infractions related to serious traffic offences, such as driving under the influence of alcohol or without a license.

We study the temporal evolution of going-concern reporting from 2004 to 2013 and test whether sanction risk is related to the likelihood of a going-concern opinion using samples of privately held firms. In 2009, the Supervisory Board of Public Accountants (SBPA) in Sweden started to issue significantly more going-concern-related disciplinary sanctions, and we test whether and how auditors at different audit firms adjust their reporting practices (Type I and Type II errors) in response to the increased sanction risk. Our findings reveal that auditors are more likely to issue going-concern opinions to bankrupt and non-bankrupt firms when the sanction risk is higher, suggesting that sanction risk is positively associated with conservatism in auditors’ reporting. Furthermore, we find that auditors at Big 4 firms alter their reporting to conservative more than non-Top 7 firms when sanction risk increases. Finally, results on the informativeness of going-concern opinions indicate that a going-concern opinion increases the bankruptcy probability during both the lower and higher sanction risk periods, but the impact is higher under the higher sanction risk period.

Antalet konkurser ökar markant som en följd av Coronakrisen. En central fråga i ekonomisk litteratur om obestånd är om ekonomiska problem hos i grunden livsdugliga företag kan leda till att företagen avvecklas och samhällsekonomiska förluster. I artikeln diskuterar jag utgående från egen och andras forskning några frågor kring vad som kännetecknar livsdugliga företag och vad som kreditgivare och företag gärna kunde beakta då företag hotas av obestånd.

Disclosures in notes have been criticized by practitioners for being unwieldy and contributing little to the quality of the financial information. This study presents evidence on the association between disclosure quality, analyst following and liquidity in the real estate sector. More specifically, we study the disclosure of the methods and significant assumptions applied in determining fair values of investment properties under IAS 40 and IFRS 13. We find that disclosure quality is significantly higher under IFRS 13. Furthermore, we show that the quality is associated with analyst following and bid-ask spreads. However, the improved disclosures following the adoption of IFRS 13 are not associated with any significant positive economic consequences. This result indicates that the revised disclosure requirements in IFRS 13 did not solve any market imperfections.

This study examines the consequences of sanctions against individual Swedish auditors issued by the Supervisory Board of Public Accountants (SBPA). The results provide no support for individual auditor client loss after receiving a sanction. However, we find that Big 4 auditors have a lower salary after the sanction than before. Finally, we do not find that auditors become more conservative in their reporting after being sanctioned. Collectively, our results support that public oversight sanctions have relatively limited consequences for auditors of private companies.

Companies can under IAS 40 Investment Properties choose between the fair value and the cost models. The fair value model arguably results in more relevant information but is also more costly to use. Based on studies suggesting that financial reports are a more important medium for communication with investors if ownership is dispersed, we hypothesize that the use of the fair value model is positively associated with ownership-dispersion. We study European Real Estate firms and find support for this prediction. We also find a positive association between trade of shares and ownership-dispersion, supporting the view that financial statements are less important if ownership-concentration is high. Finally, we examine whether the choice depends on the identity of large owners. Companies with a financial company as the largest owner are somewhat more likely to choose the fair value model. Overall, the results indicate that accounting rules facilitating optional accounting policies have benefits.

Företag med revisor sköter sin bokföringsskyldighet bättre före en konkurs än vad företag utan revisor gör. Det skriver Stefan Sundgren, Irina Alexeyeva, Niklas Nilsson och Mattias Sjödin i denna artikel som baseras på en analys av 380 aktiebolag.