Organized labor, audit quality, and internal control
Document Type
Article
Publication Date
3-1-2017
Abstract
This study investigates whether labor union strength is associated with the quality of audits and internal control. Labor unions have reason to demand high quality audits and strong systems of internal control because they rely on financial information in collective bargaining negotiations. However, organized labor creates incentives for managers to procure lower quality audits and provide weaker internal control in order to hold greater influence over the content of the financial information that unions receive. I provide evidence that union strength is associated with higher audit quality and better internal control. Specifically, I find that union strength is associated with higher audit fees, fewer audit failures, and fewer material weaknesses.
Publication Title
Advances in Accounting
Volume
36
First Page
11
Last Page
26
Digital Object Identifier (DOI)
10.1016/j.adiac.2016.09.005
ISSN
08826110
Citation Information
Bryan. (2017). Organized labor, audit quality, and internal control. Advances in Accounting, 36, 11–26. https://doi.org/10.1016/j.adiac.2016.09.005