VTechWorks staff will be away for the Thanksgiving holiday beginning at noon on Wednesday, November 27, through Friday, November 29. We will resume normal operations on Monday, December 2. Thank you for your patience.

Browsing by Author "Tan, Liang"

Now showing 1 - 2 of 2
  • Thumbnail Image
    Audit Office Closure Risk and Audit Outcomes
    DiYorio, Jonathan Gabriel (Virginia Tech, 2023-05-01)
    This study aims to better understand factors associated with audit office closures and how the risk of office closure relates to audit outcomes, including audit quality and fees. Factors associated with office closure include small office size, lower office growth, proximity to regulators, unfavorable local economic changes, client losses, and lack of recent local office closures. The main analysis does not find evidence of a relationship between closure risk and audit quality but suggests that offices with a higher closure risk charge higher audit fees per client compared to offices with lower closure risk. Results also suggest that clients who change audit firms following closure of their auditor's office enjoy higher quality and lower fees compared to those clients who change offices but remain with the same firm following closure. These audit quality results cannot be explained by clients switching to Big 4 auditors, industry specialists, or to more geographically proximate offices. Instead, these results suggest a fresh look benefit by the new audit firm. Additionally, the audit fee discount enjoyed by these clients diminishes over time as the fees for these clients increase more quickly than for those clients that change offices following closure.
  • Thumbnail Image
    Institutional Investor Cliques Information Dissemination, and the Value of Information: Evidence from Insider Trading
    Zhang, Zhenyu (Virginia Tech, 2023-04-19)
    I analyze the relationship between insider trading outcomes and insiders' information environment within a network. While most existing studies rely on one dimension of commonality (e.g., personal ties, professional ties, geographic proximity) to construct the social network, I document the formation of the institutional investor groups (cliques) that exogenously connect firm-level insiders within the social network. Using difference-in-differences designs examining changes in clique size, I provide empirical evidence on the information dissemination channels within a network in which its members are quasi-randomly selected. Insider transactions in larger cliques exhibit lower abnormal trading profits, higher level of trading frequency, and larger amount of trade size, suggesting information dissemination is increasing in clique size. Then, I provide empirical evidence that the association between the value of information and the information dissemination rate is monotonic, consistent with prior theoretical studies.