Research Kris Hardies

Abstract

The overall purpose of this project is to obtain a better understanding of the complex process of selecting a new auditor. The auditor selection process is essential in preserving auditor independence and ensuring audit quality. In order to gain insights into the selection of an auditor, this project will conduct a field study of client companies' auditor appointment decisions. We take advantage of the institutional setting of the Netherlands, where mandatory audit firm rotation has recently been implemented. In our project, we intend to examine a sample of client companies that recently experienced or are currently experiencing appointment of a new auditor, prompted by the introduction of mandated audit firm rotation, covering different phases of the auditor selection process (i.e., the preparation, the auditor selection and appointment, and the relationship after the appointment).

Researcher(s)

• Promoter: Hardies Kris

Research team(s)

• Accountancy and Finance

Project type(s)

• Research Project

Abstract

Regulators and standard setters have recently emphasized professional skepticism as a key input to audit quality (e.g., AFM 2014; PCAOB 2015; IFIAR 2015; IAASB 2015). The goal of this project is to understand the profile of auditors' professional skepticism, and to link that trait to audit judgments and decisions indicative of audit quality. Specifically, the proposed project seeks to provide answers to the following fundamental questions: (1) What is the profile of individual auditors' professional skepticism?; (2) How does professional skepticism affect the audit process and audit outcomes?; and (3) What role do audit firms' organizational conditions (e.g., firm culture) play in the application of professional skepticism on audit processes and outcomes? We make use of a well-established model in the literature on professional skepticism developed by Nelson (2009) and updated and expanded by Hurtt et al. (2013) as theoretical basis for understanding and predicting individuals' behavior. The model begins with evidential input, which includes information collected and considered during the audit. This, in turn, affects skeptical judgment, which is influenced by individual auditor characteristics (i.e., personality and individual differences), client and environmental factors (e.g., audit firm culture, financial incentives), and knowledge gained from experience and training. The outcomes of skeptical judgment can be captured in different ways (e.g., by assessing risk assessments or by examining materiality levels). Together, these judgments and characteristics affect skeptical actions (e.g., audit planning decisions, personnel allocation judgments, specialist consultations, and misstatement adjustment decisions). Skeptical actions then dictate evidential outcomes, which include evidence collection and evaluation, documentation, and audit reporting.The insights obtained from the project will not only be relevant for the academic community, but also for audit practice, standard setters, and regulators to better understand the profiles of individual auditor professional skepticism and the relationship between professional skepticism, the audit process, and audit quality.

Researcher(s)

• Promoter: Hardies Kris
• Co-promoter: Vanstraelen Ann

Research team(s)

• Accountancy and Finance

Project website

Project type(s)

• Research Project

Abstract

This project will investigate the capital market consequences of firms disseminating information through social media channels. The use of social media such as Facebook and Twitter is proliferating at an incredible pace. Many firms nowadays make use of social media as an additional channel to communicate with customers and (potential) investors. Despite the explosion of firm and investor use of social media, academic interest in the potential capital market consequences of firms' social media usage has been very limited. This research project is motivated by the relative paucity of academic research on this topic, and by the shortcomings of the few prior studies that have been conducted in this area. Therefore, the first objective of the proposed research project is to focus on a sample of firm-generated (rather than user-generated) social media messages from a broad sample of firms. As a second objective this research project will examine the capital market effects of the tone and readability of such firm-generated social media messages (as opposed to merely focusing on the number of such messages). The third objective of the research project is to account for the interactive nature of social media (i.e. users can redistribute firm-generated social media messages) when considering capital market consequences. In order to achieve these aims, the proposed research project will employ cross-sectional regressions and event studies to analyze the "tweets" (i.e. messages on Twitter) of all S&P 1500 firms.

Researcher(s)

• Promoter: Hardies Kris
• Co-promoter: Heirman Wannes
• Fellow: Gerken Fynn

Research team(s)

• Accountancy and Finance

Project type(s)

• Research Project

Abstract

Despite the explosion of firm and investor use of social media (e.g. Twitter), academic interest in the potential capital market consequences of firms' social media usage has been very limited. This research project aims to investigate the capital market effects of firm-generated social media messages by conducting a series of cross-sectional regressions and event studies to analyze the "tweets" (i.e. messages on Twitter) of 500 randomly selected listed European companies.

Researcher(s)

• Promoter: Hardies Kris

Research team(s)

• Accountancy and Finance

Project type(s)

• Research Project

Abstract

The research project aims to examine how dimensions of friendship quality in different types of adolescent friendship on SNS (offline-to-online, online-to-offline, exclusively online SNS friendships) evolve over a two-year period. Moreover, we will establish the causal pathways between adolescents' use of SNS and indicators of their psychosocial well-being by comparing their levels of self-esteem, loneliness, anxiety feelings and satisfaction with life across data waves.

Researcher(s)

• Promoter: Walrave Michel
• Co-promoter: Hardies Kris

Research team(s)

• Media, ICT and interpersonal relations in Organisations and Society (MIOS)

Project type(s)

• Research Project

Abstract

The project examines whether auditor independence in private firms is affected by the provision of non-audit services (NAS) by individual audit engagement partners. The idea that the provision of NAS may have a detrimental effect on auditor independence has been a controversial topic for many years that has attracted considerable attention from both scholars as well as the profession and regulators.

Researcher(s)

• Promoter: Hardies Kris

Research team(s)

• Accountancy and Finance

Project type(s)

• Research Project

Abstract

The main purpose of this study is to determine whether there is a link between non-audit services and audit quality on the Belgian audit market. More specifically, the study will determine whether, and to what extent, the services provided by companies' statutory auditors and their network, in addition to the performance of their audit assignment, affect their independence and the quality of the audit. Investigating this link is relevant given the current debate at European level, in response to the financial crisis, about the restriction on or even complete prohibition of the provision of non-audit services by auditors to their audit clients. The study consists of two parts. In the first part, we give a brief historical overview of the regulatory framework for non-audit services, taking into account both the Belgian and international situation, in particular American and European initiatives. Next, we focus on the evolution and composition of fees for both audit and non-audit services in Belgium over the period 2008-2010 and make a comparison with developments in other countries. We conclude the first part by addressing the empirical studies that examine at an international level the link between (fees for) non-audit services and audit quality. The literature review shows that the empirical studies have ambiguous results. In the second part, we examine whether there is effectively a link between non-audit services and audit quality on the Belgian audit market. To this end, use is made of multivariate regression analyses in order to assess the link between, on the one hand, the response or dependent variable (in this case the audit quality) and, on the other hand, the explanatory or independent variables (in this case the test variable, namely the non-audit services) and various control variables (such as the company size, the age and the financial situation) that can also have an impact on audit quality as shown in the literature. The results of these regression analyses permit us to conclude that there is little empirical support for the assumption that non-audit services have an impact (neither negative nor positive) on audit quality.

Researcher(s)

• Promoter: Hardies Kris

Research team(s)

• Accountancy and Finance

Project website

Project type(s)

• Research Project