Office level contagion: impact of a non-timely filing by a major busy season client

Justyna Skomra, R. Drew Sellers, Piotr Antoni Skomra

Research output: Contribution to journalArticlepeer-review


Purpose: This study aims to investigate the busy season contagion effects on other clients of the Big 4 auditor’s local office associated with the non-timely (NT) filing(s) by large accelerated filer (LAF) client(s) of the office. Specifically, the authors examine the influence such events have on the audit quality and timeliness of other clients of that office. Design/methodology/approach: Using panel data of annual NT filings of LAF clients between 2006 and 2019, the authors apply the ordinary least squares regression technique to model audit reporting lag (ARL) and the logistic regression technique to model the probability of restatements. Findings: Controlling for audit firm, industry and year-fixed effects, the authors find that a LAF NT filing reduces audit quality and audit timeliness of other clients of the office, as measured by restatement risk and ARL. The impact on ARL is most pronounced on the medium and small clients within the office. The deteriorated audit quality is observed for medium clients. Research limitations/implications: The results of this study have practical implications for auditors and regulators. They reveal the contagion effect in the auditor’s local office with the NT LAF client. The main limitation of the study is the lack of staffing utilization data to allow for drawing conclusions on causality. Originality/value: To the best of the authors’ knowledge, this is the first study to document the contagion effect of NT filings of LAF clients conducted at the auditor’s local office level.

Original languageEnglish (US)
Pages (from-to)758-782
Number of pages25
JournalManagerial Auditing Journal
Issue number6
StatePublished - Aug 10 2023

All Science Journal Classification (ASJC) codes

  • Economics, Econometrics and Finance(all)
  • General Business, Management and Accounting
  • Organizational Behavior and Human Resource Management


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