Paul N Michas

Interests

Teaching

Auditing. International Accounting.

Research

Auditing (audit quality, emerging markets, global auditing, industry expertise)Financial Reporting (earnings quality, International Financial Reporting Standards, international development aid, investment bias)

Courses

Scholarly Contributions

Journals/Publications

• Michas, P. N., Docimo, W. M., Gunn, J. L., & Li, C. (2021). Do Foreign Component Auditors Harm Financial Reporting Quality? A Subsidiary‐Level Analysis of Foreign Component Auditor Use*. Contemporary Accounting Research, 38(4), 3113-3145. doi:10.1111/1911-3846.12699
• Michas, P. N., Gunn, J., Li, C., & Docimo, W. (2021). Do Foreign Component Auditors Harm Financial Reporting Quality? A Subsidiary-Level Analysis of Foreign Component Auditor Use. Contemporary Accounting Research, 38(4), 3113-3145. doi:https://doi.org/10.1111/1911-3846.12699
• Michas, P. N., Dhaliwal, D., Naiker, V., & Sharma, D. (2020). Greater Reliance on Major Customers and Auditor Going‐Concern Opinions. Contemporary Accounting Research, 37(1), 160-188. doi:10.1111/1911-3846.12551
• Michas, P. N., Naiker, V., Sharma, D., & Dhaliwal, D. S. (2020). Greater Reliance on Major Customers and Auditor Going-Concern Opinions. Contemporary Accounting Research, 37(1), 160-188. doi:https://doi.org/10.1111/1911-3846.12551
• Michas, P. N., Russomanno, D., & Ashraf, M. (2020). The Impact of Audit Committee Information Technology Expertise on the Reliability and Timeliness of Financial Reporting. The Accounting Review, 95(5), 23-56.
• Michas, P. N., Gunn, J., & Kawada, B. (2019). Audit Market Concentration, Audit Fees, and Audit Quality: A Cross-country Analysis of Complex Audit Clients. Journal of Accounting and Public Policy, 38(6). doi:https://doi.org/10.1016/j.jaccpubpol.2019.106693
• Russomanno, D., Michas, P. N., & Ashraf, M. (2019). The Impact of Audit Committee Information Technology Expertise on the Reliability and Timeliness of Financial Reporting. The Accounting Review, 95(5), 23-56. doi:10.2308/accr-52622
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  We examine whether information technology expertise on audit committees impacts the reliability and timeliness of financial reporting. We find a reduction in the likelihood of material restatements...
• Michas, P. N., & Gunn, J. L. (2018). Auditor Multinational Expertise and Audit Quality. The Accounting Review, 93(4), 203-224. doi:https://doi.org/10.2308/accr-51925
• Michas, P. N., & Gunn, J. L. (2017). Auditor Multinational Expertise and Audit Quality. The Accounting Review, 93(4), 203-224. doi:10.2308/accr-51925
• Velury, U. K., Rowe, S., Roush, P. B., Rezaee, Z., Michas, P. N., Causholli, M., & Abernathy, J. L. (2016). Comments of the Auditing Standards Committee of the Auditing Section of the American Accounting Association on PCAOB Concept Release on Audit Quality Indicators, No. 2015-005, July 1, 2015. Current Issues in Auditing, 10(1), C11-C27. doi:10.2308/ciia-51316
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  This commentary summarizes the contributors’ views and recommendations on the Public Accounting Oversight Board's (PCAOB) Audit Quality Indicators (ACIs).
• Michas, P. N., Lamoreaux, P. T., & Schultz, W. L. (2015). Do Accounting and Audit Quality Affect World Bank lending. The Accounting Review, 90(2), 703-738. doi:https://doi.org/10.2308/accr-50865
• Michas, P. N., Lamoreaux, P. T., & Schultz, W. L. (2014). Do Accounting and Audit Quality Affect World Bank Lending?. The Accounting Review, 90(2), 703-738. doi:10.2308/accr-50865
• Chen, L., Jones, K. L., Lisic, L. L., Michas, P., Pawlewicz, R., & Pevzner, M. B. (2013). Comments by the auditing standards committee of the auditing section of the american accounting association on the IAASB proposal: Improving the auditor's report. Current Issues in Auditing, 7(1), C11-C20.
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  Abstract: Recently, the International Auditing and Assurance Standards Board (IAASB) solicited public comments on its proposal to improve the current format of the auditor's report under International Auditing Standards. This commentary summarizes the contributors' views on the various alternatives proposed in the IAASB proposal, entitled, Improving the Auditor's Report. The invitation to comment (which invited comments through October 8, 2012), with links to the proposal, is available at: http://www.ifac.org/publications-resources/improving-auditor-s-report. Our comments submitted to the IAASB appear below.
• Francis, J. R., & Michas, P. N. (2013). The Contagion Effect of Low-Quality Audits. Accounting Review, 88(2), 521-552. doi:https://doi.org/10.2308/accr-50322
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  Abstract: We investigate if the existence of low-quality audits in an auditor office indicates the presence of a "contagion effect" on the quality of other (concurrent) audits conducted by the office.A low-quality audit is defined as the presence of one or more clients with overstated earnings that were subsequently corrected by a downward restatement. We document that the quality of audited earnings (abnormal accruals) is lower for clients in these office-years (when the misreporting occurred) compared to a control sample of officeyears with no restatements. This effect lasts for up to five subsequent years, indicating that audit firms do not immediately rectify the problems that caused contagion.We also find that an office-year with client misreporting is likely to have subsequent (new) client restatements over the next five fiscal years. Overall, the evidence suggests that certain auditor offices have systematic audit-quality problems and that these problems persist over time. © 2013 American Accounting Association.
• Francis, J. R., Michas, P. N., & Seavey, S. E. (2013). Does audit market concentration harm the quality of audited earnings? Evidence from audit markets in 42 countries. Contemporary Accounting Research, 30(1), 325-355. doi:https://doi.org/10.1111/j.1911-3846.2012.01156.x
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  Abstract: Audit regulators around the world have expressed concern over market dominance by Big 4 accounting firms and the potential adverse effect it may have on the quality of audited financial statements. We use cross-country variation in the audit market structure of 42 countries to examine two separate aspects of Big 4 dominance: (1) Big 4 market concentration as a group relative to non-Big 4 auditors; and (2) concentration within the Big 4 group in which one or more of the Big 4 firms is dominant relative to the other Big 4 firms. We find that in countries where the Big 4 (as a group) conduct more listed company audits, both Big 4 and non-Big 4 clients have higher quality audited earnings compared to clients in countries with smaller Big 4 market shares. In contrast, in countries where there is a greater concentration within the Big 4 group, we find that Big 4 clients have lower quality audited earnings compared to countries with more evenly distributed market shares among the Big 4. Thus concentration within the Big 4 group appears to be detrimental to audit quality in a country and of legitimate concern to regulators and policymakers. However, Big 4 dominance per se does not appear to harm audit quality and is in fact associated with higher earnings quality, after controlling for other country characteristics that potentially affect earnings quality. © 2012 The Canadian Academic Accounting Association.
• Francis, J. R., Michas, P. N., & Yu, M. D. (2013). Office size of big 4 auditors and client restatements. Contemporary Accounting Research, 30(4), 1626-1661. doi:https://doi.org/10.1111/1911-3846.12011
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  Abstract: Francis and Yu (2009) and Choi, Kim, Kim, and Zang (2010) report evidence that Big 4 audits are of higher quality when the engagement office is of larger size. Specifically, client earnings quality is higher and auditors in larger offices are more likely to issue going-concern audit reports. We extend this line of research to test if larger Big 4 offices have fewer client restatements. A client restatement provides more direct evidence of a low-quality audit than earnings quality metrics or going-concern reports, because a restatement indicates the client's auditor did not effectively enforce the correct application of GAAP at the time the original financial statements were issued. We analyze 2,557 firm-year restatements in a sample of 23,190 financial statements originally issued by U.S. firms from 2003 to 2008. We find that Big 4 office size is associated with fewer client restatements after controlling for innate client characteristics that may affect restatements (client size, financial performance, industry membership, nonfinancial measures, off-balance sheet activities, and market-related measures), and a set of controls for other auditor factors such as fees and industry expertise. The study raises important questions about the ability of smaller offices to deliver high-quality audits for SEC registrants. © CAAA.
• Michas, P. N., & Francis, J. R. (2012). The Contagion Effect of Low-Quality Audits. The Accounting Review, 88(2), 521-552. doi:10.2308/accr-50322
• Khurana, I. K., & Michas, P. N. (2011). Mandatory IFRS adoption and the U.S. home bias. Accounting Horizons, 25(4), 729-753. doi:https://doi.org/10.2308/acch-50075
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  Abstract: This paper examines whether mandatory IFRS adoption at the country level lowers U.S. investors' propensity to overweight domestic stocks in their common stock portfolios (generally referred to as home bias). We find that, on average, U.S. home bias decreases for countries that mandate IFRS adoption, after controlling for country-fixed effects. We also find that the reduction in the U.S. home bias after the mandatory adoption of IFRS is greater for countries with larger differences between IFRS and their domestic accounting standards, for countries with a stricter rule of law and a common law legal origin, and in countries with greater incentives to report high-quality financial information. Overall, our results indicate that a common set of global accounting standards matters for portfolio holdings of U.S. investors and that U.S. investors regard the enforcement of standards to be a key factor in making investments outside the U.S.
• Michas, P. N. (2011). The Importance of Audit Profession Development in Emerging Market Countries. The Accounting Review, 86(5), 1731-1764. doi:10.2308/accr-10097
• Michas, P. N. (2011). The importance of audit profession development in emerging market countries. Accounting Review, 86(5), 1731-1764. doi:https://doi.org/10.2308/accr-10097
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  Abstract: This study investigates the country-level development of the audit profession in emerging market countries and whether this development is associated with audit quality and auditor choice. I find that audit quality is higher for client companieslocated in countries with a more developed audit profession, after controlling for rule oflaw and investor protection. Specifically, Big 4 client companies' total and abnormalaccruals are both lower, and earnings are more conservative in countries with stronger Audit Profession Development (APD). However, these results hold only for companies audited by a Big 4 auditor. Results also indicate that stronger APD is associated with a greater likelihood that a client company hires a Big 4 auditor. My findings contribute to the literature that explores differences in audit quality and determinants of auditor choice, the literature that explores cross-country differences in audit professions, and research on the characteristics and effectiveness of audit institutions in emerging market economies.

Presentations

• Michas, P. N. (2022, January). Auditor Office Reputation Damage and their Audit Clients' Voluntary Disclosure

  . Financial Accounting and Reporting Section Conference of the American Accounting Association. Online: American Accounting Association.

• Michas, P. N. (2022, January). Cross Country Research in Accounting and Auditing Panel Member. International Accounting Section of the American Accounting Association. Online: American Accounting Association.
• Michas, P. N. (2022, January). Panel Presentation to Doctoral Consortium. International Accounting Section of the American Accounting Association. Online: American Accounting Association.
• Michas, P. N. (2022, January). The Opportunity for Partner Industry Knowledge Sharing within Audit Offices

  . Auditing Section of the American Accounting Association. Las Vegas, NV: American Accounting Association.

• Michas, P. N. (2022, January). The Opportunity for Partner Industry Knowledge Sharing within Audit Offices

  . International Accounting Section of the American Accounting Association. Online: American Accounting Association.

• Michas, P. N., Russomanno, D., Chen, J., & Zhuang, W. (2022). United State Air Pollution and Audit Quality

  . AAA Auditing Conference.

• Michas, P. N. (2021). Do Foreign Component Auditors Harm Financial Reporting Quality? A Subsidiary-Level Analysis of Foreign Component Auditor Use?. Public Company Accounting Oversight Board. Washington D.C.: Public Company Accounting Oversight Board.
• Michas, P. N. (2021, January). Auditor Office Reputation Damage and their Audit Clients' Voluntary Disclosure

  . Auditing Section of the American Accounting Association. Las Vegas, NV: American Accounting Association.

• Michas, P. N. (2021, October). Auditor Office Reputation Damage and their Audit Clients' Voluntary Disclosure

  . Brigham Young University Accounting Research Conference. Provo, UT: Brigham Young University.

• Michas, P. N. (2021, October). Auditor Office Reputation Damage and their Audit Clients' Voluntary Disclosure

  . Public Company Accounting Oversight Board Conference on Auditing and Capital Markets. Online: Public Company Accounting Oversight Board.

• Michas, P. N. (2021, October). The Opportunity for Partner Industry Knowledge Sharing within Audit Offices

  . Public Company Accounting Oversight Conference on Auditing and Capital Markets. Online: Public Company Accounting Oversight.

• Michas, P. N., Cheng, M., & Zhao, M. (2021). Auditor Office Reputation Damage and their Audit Clients' Voluntary Disclosure

  . AAA Annual Conference.

• Michas, P. N., Docimo, W., Gunn, J., & Li, C. (2021). Do Foreign Component Auditors Harm Financial Reporting Quality? A Subsidiary-Level Analysis of Foreign Component Auditor Use

  . University of Massachusetts-Amherst Accounting Department.

• Michas, P. N., Russomanno, D., Chen, J., & Zhuang, W. (2020). United State Air Pollution and Audit Quality

  . AAA Western Regional Conference.

• Michas, P. N., Cheng, L., Schatzberg, J. W., & Jaggi, J. (2019). Auditor Communication Provisions in Private Loan Agreements: Do They Matter?

  . AAA Financial Accounting and Reporting Conference.

• Michas, P. N., Docimo, W., Gunn, J., & Li, C. (2019). Do Foreign Component Auditors Harm Financial Reporting Quality? A Subsidiary-Level Analysis of Foreign Component Auditor Use

  . Singapore Management University Accounting Department.

• Michas, P. N., Docimo, W., Gunn, J., & Li, C. (2019). Do Foreign Component Auditors Harm Financial Reporting Quality? A Subsidiary-Level Analysis of Foreign Component Auditor Use

  . University of Pittsburgh Accounting Department.

• Michas, P. N., Russomanno, D., & Ashraf, M. (2019). The Impact of Audit Committee Information Technology Expertise on the Reliability and Timeliness of Financial Reporting

  . AAA Auditing Conference.

• Michas, P. N., Russomanno, D., & Ashraf, M. (2019). The Impact of Audit Committee Information Technology Expertise on the Reliability and Timeliness of Financial Reporting

  . AAA Financial Accounting and Reporting Conference.

• Michas, P. N. (2018, 2018). Audit Market Concentration, Audit Fees, and Audit Quality: A Cross-country Analysis of Complex Audit Clients. Presentation at AAA International Section Conference. Long Beach, CA: AAA.
• Michas, P. N. (2018, Spring). The Impact of Audit Committee Information Technology Expertise on the Reliability and Timeliness of Financial Reporting. University of Texas. University of Texas-Austin: University of Texas-Austin.
• Michas, P. N., Cheng, L., Schatzberg, J. W., & Jaggi, J. (2018). Auditor Communication Provisions in Private Loan Agreements: Do They Matter?

  . AAA Annual Conference.

• Michas, P. N., Russomanno, D., & Ashraf, M. (2018). The Impact of Audit Committee Information Technology Expertise on the Reliability and Timeliness of Financial Reporting

  . University of Texas.

• Michas, P. N., Cheng, L., Schatzberg, J. W., & Jaggi, J. (2017, Fall). Auditor Communication Provisions in Private Loan Agreements: Do They Matter?

  . Brigham Young University Accounting Research Conference.

• Michas, P. N. (2014, April). Major Customer Reliance and Auditor Going Concern Decisions. Research presentation to accounting department at the University of Miami (Miami, FL). Miami, FL: University of Miami.
• Michas, P. N. (2014, January). Major Customer Reliance and Auditor Going Concern Decisions. Audit section of the American Accounting Association Annual Conference. San Antonio, TX.