The Effect of Audit Firm Mergers on Audit Delay

The Effect of Audit Firm Mergers on Audit DelayAuthor(s): Janice E. Lawrence and Hubert D. GloverSource: Journal of Managerial Issues, Vol. 10, No. 2 (Summer 1998), pp. 151-164Published by: Pittsburg State UniversityStable URL: http://www.jstor.org/stable/40604190 .

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JOURNAL OF MANAGERIAL ISSUES Vol. X Number 2 Summer 1998: 151-164

The Effect of Audit Firm Mergers on Audit Delay

Janice E. Lawrence Associate Professor

University of Nebraska

Hubert D. Glover Senior Consultant

Enterprise Advisory Services, Inc.

The audit profession has under- gone significant changes in the last decade. Specifically, the Big Eight was reduced to the Big Six by the merger of Deloitte, Haskins and Sells with To- uche Ross to form Deloitte & Touche, and the merger of Ernst 8c Whinney with Arthur Young to form Ernst & Young. In addition, Peat Marwick & Mitchell merged with KMG Main Hurdman in 1987 to form KPMG Peat Marwick. These mergers, as well as additional merger discussions among the remaining Big Six accounting firms, have been attributed primarily to the cost of increased reg- ulation, litigation, and competitive survival (Berkovitch and Narayanan, 1993) . The impact of these audit firm mergers on their output, the audit report, should be examined. This study explores the impact of these audit firm mergers on one aspect of the audit report: audit delay, which can be defined as the length of time between the fiscal year-end of a company and the date of the auditor's report.

To be useful in business decision making, accounting information must be reliable, relevant, and timely. The major factor determining the perception of timeliness by users of financial statements is the lag between the end of the fiscal year and the issuance of the earnings announcement. Audits of financial statements delay the release of this information to the public and other consumers of accounting information. According to Givoly and Pal- mon, the length of the audit is the "single most important determinant of the timeliness of the earnings announcement" (1982: 491). This timeliness is a function of the number of hours of audit time required and is also affected by such factors as the amount of interim audit work performed, the number of audit personnel assigned to the engagement, and the number of overtime hours worked.

Specifically, the purpose of this study is to provide a pre-/post-merger

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152 Lawrence and Glover

analysis of audit delay between the years 1986 and 1991. This extends prior research in important ways. First, the time period of this study is more recent than that used in prior audit delay research; previous audit delay studies focus on periods prior to the audit firm mergers. Also, studies to date of the impact of the audit firm mergers do not examine audit delay. Second, while prior studies consider client/auditor traits as ex- planatory variables for audit delay, this study holds these traits constant allowing the effect of audit firm mergers to be examined.

PRIOR RESEARCH

Audit Delay

Several audit studies focus on audit delay or audit efficiency proxied by audit delay. Newton and Ashton (1989), Bamber et al. (1993), Carslaw and Kaplan (1991) and Williams and Dirsmith (1988) focus on the rela- tionship between audit delay and other firm characteristics such as audit technology (structure) or firm size. Audit technology here is defined as the classification of the firm's audit approach as highly structured, inter- mediate, or unstructured.

The extant audit structure metric is a tri-level classification developed by Kinney (1986). Williams and Dirs- mith (1988) report an inverse rela- tionship between a firm's audit technology (as defined by Kinney (1986) and Cushing and Loebbecke (1986)) and audit delay. Newton and Ashton (1989) extend audit delay studies to Canadian Big Eight firms with the op- posite results. They find structure tends to increase audit delay. Bamber et al. (1993) recently attempted to reconcile these inconsistent results in

prior research by evaluating the in- centives to report on a timely basis along with audit complexity and audit technology. Their findings also suggest a positive correlation between audit technology and audit delay. The results of this study might provide insight into why the inconsis- tency exists in the results of the earlier studies.

Firm Aiergtrs

Organizational theory offers synergy as one motivation for corporate mergers. Synergy is defined as the ability to maximize the complemen- tary strengths of the uniting organizations to achieve certain objectives. According to Berkovitch and Naray- anan (1993), synergy is generally measured in the post-acquisition period by an organization's ability to penetrate new markets, increase ex- isting market share, and enhance revenue and market based ratios such as the price-earnings ratio. Hopkins (1991) notes that mergers are generally evaluated using one of three factors: market share, financial performance, or operational efficiency.

Davis and Stout (1992) find that mergers are generally associated with a desire to survive rather than to find a common management philosophy. They, along with other organizational theorists, find that the primary motivation for mergers is to find new markets, enhance research and develop- ment, or access new sources of technology. Evidence of this is found by Minyard and Tabor (1991) and Kaplan et al. (1990) in the increased specialization among the Big Six firms within certain industries following the mergers. Minyard and Tabor (1991) and Kaplan et al. (1990) also suggest that audit firms have recently




Effect of Audit Firm Mergers on Audit Delay 153

enjoyed significant increases in revenue from the growth in consulting and other nonaudit (or nonattesta- tion) services. According to profes- sional publications such as Public Ac- counting Report (1989), revenues from services other than the traditional audit services now exceed more than 50% of total revenue for firms such as Arthur Andersen and Ernst 8c Young. These services represent the outsourcing of services from the clients to the audit firms. The increase in outsourcing internal audit services alone led to a recent ruling on the AICPA's Standards of Ethics Rule (Ruling No. 97, Extended Audit Serv- ices) to provide a guideline for the outsourcing of internal audit services. Increases in market share and financial performance are attributed to the firm mergers as well as the demise of three national firms - Laventhol 8c Horwath, Spicer 8c Oppenhiem, and Pannel, Kerr, 8c Foster.

Operational Efficiency

In view of the challenges confront- ing the audit profession it is likely that one motivation behind the three sets of mergers is the potential to increase operating performance. Previ- ous studies analyze the impact of the mergers on firm market share and on financial elements, such as revenue and partner earnings. However, there is a lack of information regarding the impact of the firm mergers on operational efficiency, another factor commonly used to evaluate mergers. Operational efficiency has a direct bearing on the timeliness of the audit report and earnings announcement.

As operational efficiency increases, audit delay decreases. Kinney and McDaniel (1993) find audit delay to

be related to the correction of previously reported earnings. Longer audit delay is found when corrections of prior reported earnings are neces- sary. Operational efficiency is im- pacted by factors such as interim work performed, the number of overtime hours worked, the number of personnel assigned to the audit, as well as their experience with the company and the industry. Information about these factors is not publicly nor read- ily available so efficiency is inferred from the timeliness of the output or audit delay.

Measuring Audit Delay

Craig (1993) examines the determinants of audit delay metrics used previously in a sample of 318 U.S. companies. He finds firm size, industry, audit structure and calendar year- end among the variables consistently and significantly associated with audit delay. Craig (1992) suggests that future research should examine the time-series properties of audit delay rather than cross-sectional effect of factors on the production of audit services. In addition, O'Keefe et al. (1992) find client traits, such as risk, do not have a systematic affect on audit hours. Consequently, they also suggest a broader research focus with less emphasis on specific client or auditor traits.

This study responds to the calls by both Craig (1992) and O'Keefe et al. (1992) for change in research focus. This research seeks to extend prior literature by conducting a pre-/post- analysis of audit delay to determine the impact of audit firm mergers.





HYPOTHESES

Pre-/Post-Comparison of Audit Delay of Merged Firms

Dirsmith and Haskins (1991) suggest that the organizational design for the Big Six following the mergers is improved. Thus, merged firms are expected to operate more efficiently in their selected niche following the merger. Likewise, the merged firms are expected to be more efficient than the former individual firms which merged. Audit delay for merged firms as a class is expected to significantly decrease. This expecta- tion is hypothesized, in the alterna- tive form, as:

H,: The audit delay of merging firms will decrease following the merger.

Prfr/Post-Comparison of Audit Delay of Merged Firms with that ofNonmerged Firms

Organizational theorists indicate that a primary benefit ofmerging two large firms is achievement of organizational synergy (Hitt et al., 1991). In the audit industry, for example, market analysis suggests that audit firms seek to become stronger industry spe- cialists through mergers (Kaplan et al., 1990). This synergy is expected to increase audit efficiency, therefore, decreasing audit delay.

Since the competitive environment leads all audit firms to increase their operational efficiency and decrease their audit delay over the merger period, it is important to control for changes not attributable to the mergers. Therefore, as a control, changes in audit delay for nonmerged firms are used for comparison purposes. We expect that, over the period of study, the decrease in audit delay for

merged firms as a class will be significantly larger than the decrease for firms which did not merge. This ex- pectation is hypothesized, in the al- ternative form, as follows:

Ht: Following the mergers, the decrease in audit delay for merged firms will be greater than the decrease for nonmerging firms.

RESEARCH DESIGN

Pre-/Postronalysis of Audit Firm Mergers

Prior studies (i.e., Ashton et al., 1989; Carslaw and Kaplan, 1991; New- ton and Ashton, 1989) focus on firm and client traits by employing the following basic regression model:

Audit Delay = f (N,S,O,CA),

where, Ν = Audit Firm Name, S = Audit Firm Structure, Ο = Audit Opinion, C = Client Traits (e.g., sizes, earnings

trends, or industry) A = Announcement Timing (e.g., early, av-

erage, late).

This study uses a matched pair design to hold such traits constant allowing the general effect of the audit firm mergers to be examined.

Parametric t-tests are used to measure the significance of changes in audit delay over the period of study. This pre-/post-analysis will provide an indication of any synergy resulting from the mergers evidenced by decreased audit delay.

Audit Delay Metric

Audit delay serves as a proxy for timeliness (and operational efficiency) in this study. A decrease in audit delay implies an increase in timeliness and efficiency. Audit delay is





calculated here as the number of days lapsing between the year-end date (December 31 for the companies in this study) and the fourth quarter earnings report date as reported in the COMPUSTAT data base. Accord- ing to the COMPUSTAT manual, this metric is the earlier of the Wall Street Journal earnings announcement date or the actual audit report date. Valid- ity tests of different audit delay metrics find that audit-delay metrics provide reasonable proxies for cross- sectional differences in the percent- age of audit work performed after year-end (Craig, 1992).

Time Period Selection

The pre-merger year selected for comparative purposes in this study is 1986, the last full year prior to the merger of Peat, Marwick & Mitchell with former ninth ranked KMG Main Hurdman in 1987.

The post-merger year used is 1991. This is also the post-merger time period selected by Wootton et al. (1994) for their comparison of auditor concentration pre- and post-mergers. The Deloitte & Touche and Ernst 8c Young mergers were concluded prior to December 31, 1989. Using 1991 provides a two-year transition period following these audit firm mergers and a four-year transition period following the KPMG Peat Marwick merger.

Sample Selection

The data are drawn from the COM- PUSTAT data base. The initial sample is comprised of all New York Stock Exchange and American Stock Ex- change firms on Standard 8c Poor's Industrial list. To remain in the sample, the companies must be listed in

the COMPUSTAT data base for both 1986 and 1991.

Companies with other than an unqualified (with or without an explan- atory paragraph) audit opinion in both 1986 and 1991 are excluded from the sample. Audit report quali- fication is an infrequent occurrence with varying causes for most firms and exclusion of these companies from the sample eliminates the effects of a qualified opinion on the length of field audit work. Previous research (Ashton et al., 1987; Ashton et al., 1989; Craig, 1993) found a negative association between firms with a calendar year-end and length of audit delay. Therefore, companies with noncalendar year-ends are also omitted from the sample to eliminate con- cerns of a nonbusy season effect on audit delay.

Companies using only Big Eight (in 1986) or Big Six (in 1991) audit firms are included in the sample. Previous research has established associations between audit delay and proxies for company size such as total assets (Ashton et al., 1989; Newton and Ash- ton, 1989) or revenues (Givoly and Palmon, 1982; Ashton et al., 1987). To control for variations in such client portfolio demographics among audit firms, the client portfolio for each firm is held constant from the pre- to the post-merger period and only the change in audit delay over the period of the study is examined. This is accomplished by eliminating those companies changing auditors during this time. A change to a merged audit firm in 1991 was not considered to be a change of auditors if the 1986 audit firm was one of the firms comprising the merger. In other words, the same companies comprise an individual audit firm's client portfolio sample in both 1986





and 1991. Therefore, the changes in audit delay for the individual audit firms are unaffected by client portfolio differences. Elimination of companies switching auditors also controls for variations in audit delay attributable to differences in audit technology (structure) between auditors. These sample screens result in a final sample of 204 companies which have:

1) a December 31 year-end, 2) unqualified opinions in both

1986 and 1991, and 3) the same Big Eight (Six) audi-

tor in both years. The size of the client portfolio in

1991 for individual audit firms in this study ranges from 21 (Peat, Marwick 8c Mitchell) to 46 (Price Water- house). While the sample size is small, we believe it is representative of large U.S. audit clients who do not switch auditors, retaining the same Big Eight (Six) audit firm over the period of the study.

Audit Firm Classification

TABLE 1 provides selected descriptive data on the sample. The merger/nonmerger classification and size of the client portfolio sample of each audit firm is summarized. Ar- thur Anderson, Coopers & Lybrand and Price Waterhouse are classified as nonmerged audit firms. Deloitte 8c Touche (formed as a result of the merger of Deloitte, Haskins & Sells with Touche Ross), Ernst 8c Young (formed as a result of the merger of Ernst 8c Whinney with Arthur Young) and KPMG Peat Marwick (formed as a result of the merger of KMG Main Hurdman with Peat, Marwick & Mitchell) are classified as merged audit firms.

RESULTS

Descriptive Statistics

The Big Six firms as a whole experience a significant decrease in audit delay following the mergers. TABLE 2 indicates a decrease in mean audit delay from 34.43 days in 1986 to 30.72 days in 1991.

Hypothesis H,: Pre-ZposPcomparison of Mjerged Finns

The change in audit delay for the merged and nonmerged firm classifications is examined. The results shown in TABLE 3, Panel A fail to support Hj. The decrease in mean audit delay for merged firms from 33.14 days in 1986 to 31.86 days in 1991 is not statistically significant. This suggests that the mergers did not achieve the anticipated increase in operational efficiency.

Hypothesis H2: Pre-/ post-comparison of Merged until Nonmerged Firms

Unexpectedly, TABLE 3, Panel Β reports a significant decrease in audit delay for nonmerged firms, decreasing from 35.46 days in 1986 to 29.80 in 1991. The difference in mean audit delay between the firms classified as merged and those classified as nonmerged firms is shown in TABLE 3, Panel C. According to the organizational theorist we should observe an increase in the operational performance of the merged audit firms in comparison to the nonmerged audit firms following the mergers as the merged firms reap efficiency benefits from synergy following the merger. The difference in audit delay between classifications is expected to significantly change. However, the results do not support this theory. The





TABLE 1

Selected Data on The Audit Firms and Their Sample Client Portfolios

Number of Clients Audit Firm

Year in Sample

Nonmerged Firms: Arthur Anderson 1986 40

1991 40

Coopers & Lybrand 1986 27 1991 27

Price Waterhouse 1986 46 1991 46

Merged Firms: Arthur Young 1986 19 Ernst & Whinney 1986 26 Ernst & Young 1991 45

Deloitte, Haskins & Sells 1986 17 Touche Ross 1986 8 Deloitte & Touche 1991 25

Peat, Marwick & Mitchell 1986 21 KPMG Peat Marwick 1991 21

difference in audit delay between the two firm classifications (-2.28 days in 1986 and 2.06 days in 1991) is not significant in either the pre- or the post- merger period. The audit delay of the merged firms remains nonsignifi- cantly different than that of the nonmerged firms.

The 1986 and 1991 mean audit delays for individual firms are shown in TABLE 4. These range from 36.92 to 31.33 days in 1986 and from 32.35 to 28.28 days in 1991. Prior studies report audit delays ranging from 28 to 54 days, depending upon the metric used to calculate audit delay. For ex-

TABLE 2

Pre-/Post-analysis of Audit Delay For Big Six Firms as a Whole

Mean Audit Year Delay (days) Difference t-Statistic ρ -Va lue

1986 34.43 3.71 3.4232 0.0007

1991 30.72





table 3

Comparison of Audit Delay For Merged And Nonmerged Firm Classifications

Panel A. Pre-/Post-analysis of Audit Delay for Merged Firms


1986 33.14 1.28 0.8905 0.3744

1991 31.86

Panel Β. Pre-/Post-analysis of Audit Delay for Nonmerged Firms


1986 35.46 5.66 3.6036 0.0004

1991 29.80

Panel C. Intra-year Comparison Between Merged and Nonmerged Firms


in 1986: Nonmerged 35.46 2.32 1.412 0.159 Merged 33.14

In 1991: Nonmerged 29.80 2.06 1.541 0.124 Merged 31.86

ample, Bamber et al. (1993) find a mean audit delay of 40 days when using the audit report date. Craig (1992) finds audit delay ranges from 28 to 46 days, depending on the date used to calculate audit delay. As in- dicated in TABLE 4, every firm ex- periences a decrease in audit delay between 1986 and 1991, although only the decreases for individual non-

merged firms are individually significant. These decreases range from .54 (Ernst & Whinney) to 6.08 days (Ar- thur Andersen).

Nonmerged firms could be com- paratively more efficient because they do not face post-merger transition and reorganization as noted by Hitt et al. (1991). Nonmerging firms are free to invest resources in manage-





TABLE 4

Mean Audit Delay by Audit Firm

Mean Audit Delay Audit Firm Year days (Std Dev) t-Stat. p-Value

Arthur Anderson 1986 36.35 (16.415) 1.974 0.0525 1991 30.27 (10.456)

Arthur Young 1986 34.10 (10.102) 0.8566 0.3765 Ernst & Young 1991 32.04 (11.189)

Ernst & Whinney 1986 32.58 (11.787) 0.1566 0.8765 Ernst & Young 1991 32.04 (11.189)

Coopers & Lybrand 1986 36.92 (13.170) 1.6905 0.0969 1991 31.70 ( 9.176)

Deloitte Haskins & Sells 1986 33.69 ( 8.767) 0.6173 0.5398

Deloitte & Touche 1991 32.35 ( 9.829)

Touche Ross 1986 35.00 (10.062) 1.0329 0.3003 Deloitte & Touche 1991 32.35 ( 9.829)

Peat, Marwick & Mitchell 1986 31.33 ( 9.355) 0.2369 0.8139

KPMG Peat Marwick 1991 30.61 (10.166)

Price Waterhouse 1986 33.84 (11.878) 2.6161 0.0104 1991 28.28 ( 8.188)

ment and training rather than costly office closing, severance packages, and other merger costs. In addition, nonmerged firm personnel do not re- quire a transition or reorganization time period. Perhaps these costs of merging are still accruing; however, two years appears to be a reasonable transition period, given the normal Big Six orientation for turnover and short-term project management. Ad- ditional research could examine changes in audit delay over a longer span of time. Examining a larger sample, by including companies with other than calendar year-ends or with other than clean audit opinions, could provide additional insights, also.

Additional Analysis

The above results suggest firms which merged do not experience a significant decrease in audit delay in contrast to their nonmerged counter- parts. This section explores potential reasons for this lack of significance found among merged firms and further validates the above findings.

No systematic pattern emerges when significant differences in mean firm audit delays are analyzed for 1986 on an individual firm basis. TA- BLE 5 indicates that two firms, Arthur Young and Price Waterhouse, have mean audit delay values that do not vary significantly (at the 0.05 level) from any other firms in 1986. Arthur




1 60 Lawrence and Glover

TABLE 5

Analysis of Mean Audit Delay Among Audit Firms

Panel A. Significant Differences Among Firms in 1986:

Firms Having a Mean Audit Significantly Different

Audit Firm Delay (days) Mean Audit Delay*

Arthur Anderson 36.35 Peat, Marwick & Mitchell

Arthur Young 34.10 None

Ernst & Whinney 32.58 Coopers & Lybrand Touche Ross

Coopers & Lybrand 36.92 Deloitte, Haskins & Sells Ernst & Whinney Peat, Marwick & Mitchell

Deloitte Haskins & Sells 33.69 Coopers & Lybrand Touche Ross

Touche Ross 35.00 Deloitte, Haskins & Sells Ernst & Whinney Peat, Marwick & Mitchell

Peat, Marwick & Mitchell 31.33 Touche Ross Cooper & Lybrand Arthur Anderson

Price Waterhouse 33.84 None

Firms listed have mean audit delay values that significantly differ at the 0.05 level.

Young's mean audit delay value in 1986 is also not significantly different than that of its fellow merging firm, Ernst 8c Whinney. However, the mean audit delay ofmerging firms Deloitte, Haskin 8c Sells and Touch Ross are found to be significantly different in 1986. Thus, there is no consistency in the merged firms' pre-merger characteristics. Combining individual firms with varying pre-merger characteristics could have confounded the results in this study. This could be one factor contributing to the lack of significance in audit delay changes

between the years 1986 and 1991 when merged firms are taken as a whole (See TABLE 3, Panel A). Any uncontrolled variations in individual firm characteristics that existed in prior research could have contrib- uted to the inconsistencies in the results of those studies.

Further analysis and comparison of individual Big Eight and Big Six firms finds that the pre-merger audit delay differences disappear following the mergers for all firms with one notable exception: Price Waterhouse. While Price Waterhouse has the lowest





TABLE 5 (continued)

Analysis of Mean Audit Delay Among Audit Firms

Panel B. Significant Differences Among Firms in 1991:

Firms Having a Mean Audit Significantly Different

Audit Firm Delay (days) Mean Audit Delay*

Arthur Anderson 30.27 None

Ernst & Young 32.04 Price Waterhouse

Coopers & Lybrand 31.70 Price Waterhouse

Deloitte Touche 32.35 Price Waterhouse

KPMG Peat Marwick 30.61 None

Price Waterhouse 28.28 Coopers & Lybrand Deloitte Touche Ernst & Young

* Firms listed have mean audit delay values that differ significantly at the 0.05 level.

mean audit delay in 1991, its 1986 mean audit delay did not differ significantly from any of the other firms (See TABLE 5, Panel A). In 1991, the post-merger period, the audit delay for this firm is significantly lower than for the other Big Six firms. In other words, Price Waterhouse decreased their audit delay metric more than any other firm.

To determine whether Price Water- house is driving the results, the anal- yses are repeated omitting Price Wa- terhouse from the sample. The results are robust and remain com- parable when Price Waterhouse is omitted.

LIMITATIONS

The post-merger period (1991) examined in this study follows the initial completion of the Big Six mergers by two years. During this period, each

firm experienced significant challenges adopting new cultures, prac- tices and organizational and managerial philosophies into one firm-wide position (Cravens et al., 1994). Consequently, these results are preliminary and should be extended in further research to provide a more longitudinal analysis. This will allow the profession to track the stages of response to the merger ac- tivity to determine and measure the full impact and related future implications.

The results suggest that audit delay decreased, which implies an increase in timeliness and efficiency during the period of study. We have not noted or measured the impact con- founding variables, such as information technology, regulatory changes and industry consolidation (e.g., bank mergers), could have on the audit process. Furthermore, we have not





examined the direct impact of general changes in the delivery of audit services. This study focuses solely on the raw measure of audit delay.

While this study carefully controls for variations in a firm's client portfolio between the pre- and post- merger periods (by the use of a matched pair sample design), the only client traits controlled for are fiscal year-end and audit opinion. The lack of control for additional client portfolio trait variations between the merged and nonmerged categories of firms is an additional limitation to the study. To the extent that additional traits vary between merged and nonmerged audit firms, the comparabil- ity of these firm categories in hypothesis 2 is affected.

SUMMARY

The timely release of audit reports and their accompanying information is of utmost concern to the users of the financial statements. This research analyzes the effect of the audit firm mergers on audit delay. Previous audit delay studies focus only on periods prior to the audit firm mergers which reduced the Big Eight to the Big Six. Studies of the post-merger period have examined the market share and financial performance characteristics in the post-merger period, but not audit delay. This study is the first to focus on the impact of the mergers on audit delay as a proxy for timely operational performance.

A matched pair pre-/post-merger analysis is used to examine the effect of the audit firm mergers on the timely release of information as measured by audit delay. A significant de-

crease in audit delay is noted for Big Six firms taken as a whole between 1986 and 1991. However, when the firms are categorized as merged or nonmerged firms, we find a significant decrease in audit delay only for nonmerged firms over this period; audit delay for merged firms did not significantly decline. The results do not support the expected improvement in operational efficiency for merged firms. This challenges one of the purported benefits of audit firm mergers: increased operational efficiency through synergy. The significant improvement in the timeliness of the release of financial statement information for the Big Six firms overall can not be attributed to the mergers.

Audit management is faced with challenges of global competition, rapid changes in information delivery (e.g., Internet, Web pages), ongoing consolidations in mature industries (e.g., telecommunications), along with overnight rises to Fortune 500 status in other industries. Firms must gain an understanding of the optimal organizational model and the relevant impact of certain strategies such as mergers. Evaluation and analysis of organizational initiatives which are executed to achieve specific results should be measured both in cross-sectional and longitudinal formats to gain a clear understanding of its suc- cess. Because firms today seek to improve their performance through reengineering or through mergers, researchers should continue to evaluate the impact of such initiatives on the timely release of information to users of accounting information.





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Corresponding author. Janice E. Lawrence ([email protected])




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The Effect of Audit Firm Mergers on Audit Delay