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SYNOPSIS: Prior studies on readability suggest that lengthy corporate reports are difficult to process and may discourage investors' capital market participation. However, longer reports that contain additional information may actually benefit individual investors, who typically rely on public information. Using a regulatory change that requires firms to disclose additional items in the IPO prospectus, we find that the new regulation increased individual investors' demand for IPO stocks with longer prospectuses. These results suggest that lengthy reports do not always reduce investor demand, highlighting a potential trade-off between the costs and benefits of longer corporate reports. Data Availability: All data are publicly available from the sources identified in the text. JEL Classification: G18; M41; M48. [ABSTRACT FROM AUTHOR]

In this study, we discuss how small audit firms (i.e. non‐Big 4 audit firms) address the staffing crunch during the busy season. Using monthly certified public accountant (CPA) employment data from Korea, we find that the number of CPAs in non‐Big 4 audit firms peaks before the busy season but drops afterward, suggesting the prevalence of part‐time or short‐term employment (i.e. flexible staffing). Flexible CPA staffing is more prevalent in audit firms with lower sales, higher sales growth and lower profitability. We further document that the standard deviation of the changes in monthly CPA numbers within a year is negatively associated with audit fees, implying that flexible staffing enables small audit firms to charge lower fees to clients. Additionally, we find no evidence that flexible staffing significantly impairs audit quality. We also report evidence that non‐Big 4 audit firms attract more clients when they are more flexibly staffed than otherwise. Collectively, non‐Big 4 firms reduce operating leverage via flexible staffing arrangements and share the benefits with clients without compromising audit service quality. [ABSTRACT FROM AUTHOR]

We examine how labor-friendly institutional features (i.e., laborism) relate to corporate investment efficiency in labor in a sample of firms from 33 countries over 1996–2012. We consider three dimensions of laborism—the presence of a left-leaning government, rigidity of employee protection laws, and collectivist culture. Our evidence shows that firms operating in stronger laborism countries make less efficient labor investment decisions, which is consistent with higher labor adjustment costs associated with laborism. [ABSTRACT FROM AUTHOR]

Recent literature suggests that compared to non‐local CEOs, local CEOs care more about reputation capital and hence exhibit a longer‐term orientation. Building on this literature, we address the audit pricing of CEO locality. Our empirical analyses reveal that audit fees for firms with local CEOs are lower than those for firms without local CEOs, suggesting a lower audit risk associated with local CEO clients. Seeking the underlying reasons, we indeed find that both client business risk and misreporting risk are lower for firms with local CEOs. Our results are robust to using the matched sample, controlling for potentially correlated variables, change analyses and other alternative specifications. We add to a maturing stream of auditing literature that CEOs' individual traits affect audit pricing. [ABSTRACT FROM AUTHOR]

Copyright of Contemporary Accounting Research is the property of Canadian Academic Accounting Association and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Copyright of Contemporary Accounting Research is the property of Canadian Academic Accounting Association and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Copyright of Contemporary Accounting Research is the property of Canadian Academic Accounting Association and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)