This paper examines whether allowing non-CPAs to own an equity stake in CPA firms affects audit quality. Exploiting the staggered adoption of state statutes that allow non-CPA ownership in audit entities, I compare audit quality between clients whose auditors operate in adopting states and those whose auditors operate in non-adopting states. I study three audit settings: public company financial statement audits, nonprofit organization (NPO) financial statement audits, and employee benefit plan (EBP) audits. Across all three settings, I find that audit quality declines following adoption, with the declines concentrated among clients audited by small audit firms. Adoption is also associated with an increase in the number of audit firms operating in treated states and lower audit fees in NPO and EBP audits. In contrast, public company audit fees remain unchanged. These results indicate that fee pressure arises primarily in markets dominated by small audit firms. Taken together, the evidence suggests that non-CPA ownership weakens professional accountability within small audit firms and intensifies competition in the audit markets those firms dominate, affecting both audit quality and pricing.

This registered report proposes to examine whether offshoring a company’s accounting function affects financial reporting quality. Offshoring can generate efficiency gains by reducing costs, expanding access to accounting talent, and enabling specialization. However, it may also impair reporting quality by creating communication frictions, weakening oversight, and increasing coordination costs across locations. We propose to measure financial reporting quality using confidential PCAOB data on audit adjustments—misstatements in companies’ pre-audit financial statements identified by auditors before financial statements are finalized. We measure accounting offshoring primarily at the company-year level using Revelio Labs resume data, defined as the share of a company’s accounting employees located outside the U.S. We supplement this measure with an industry-year measure of accounting service imports from the Bureau of Economic Analysis, which captures both in-house and outsourced offshoring. To mitigate endogeneity concerns, we exploit India’s 2017 amendment to its Special Economic Zones program, which extended tax and regulatory benefits to exporters of accounting services and plausibly reduced the cost of India-based accounting offshoring. The study will provide evidence on whether accounting offshoring creates a cost–quality tradeoff or allows companies to reduce costs and alleviate accounting labor constraints without compromising financial reporting quality.

This paper examines whether boards respond to tax-induced changes in the incentive horizon they design, arising from the differential tax treatment of CEOs’ short-term incentives (e.g., bonuses or performance-vesting conditions of equity awards) and long-term incentives (e.g., gains from equity awards). Using staggered changes in state-level ordinary income and long-term capital gains tax rates, we find that boards do not adjust incentive weights in a timely manner. Nonetheless, CEOs do respond to these incentive changes. Specifically, tax-induced decreases in the after-tax weight on long-horizon incentives lead CEOs to engage in more myopic behavior, whereas increases in the after-tax weight on long-horizon incentives mitigate such behavior. The effect of after-tax weights is stronger when the affected pay component constitutes a larger share of CEOs’ pay-for-performance sensitivity. Competitive product markets mitigate the extent of myopic behavior. Overall, our results suggest that taxes distort the realized, after-tax composition of short- and long-term incentives, exogenously shifting the balance of horizons designed by the board.

This paper examines whether corporate insiders trade profitably on nonpublic information about U.S. federal contract awards. Federal agencies privately notify winning firms before publicly posting award information, creating a gap during which winning firms know the procurement outcome and outside investors do not. Linking 67,599 awards to insider trading records from 2010 to 2024, we find that insiders are more likely to purchase shares of their own firms during the gap. These purchases generate abnormal returns of 8.2 basis points per day (23 percent annualized), whereas we find no evidence of comparable profitability for contemporaneous insider sales. Profitability increases with the duration and strength of insiders’ information advantage, with higher returns when disclosure gaps are longer, contracts are more material, awards are competitive rather than sole-source, and firms’ information environments are weaker. We further exploit a 2021 change in Department of Defense (DoD) disclosure practices that extended the disclosure gap for DoD awards from roughly four to 90 days, while disclosure timing for civilian awards remained unchanged. Following the change, abnormal returns on insider trades during the gap increase for DoD awards relative to civilian awards. Overall, our findings extend prior research on insider trading beyond firms’ own reporting choices by providing evidence that insiders profit from information advantages created by the design of government disclosure systems.