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Faculty of Law, Business & Economics

Assistant Professorship of Auditing | Prof. Dr. Sven Hörner

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Research Areas

  • Perceived Audit Quality and Earnings Quality of Public Firms
  • Shareholder Voting at Annual General Meetings
  • ​Audit Quality Differentiation in the German Private Firm Setting

The European Union (EU) has always been interested in the reliability of accounting information and auditor independence. Simultaneously, the EU is interested in fostering shareholder rights and long-term shareholder engagement at the annual general meeting. Current EU regulations underpin these interests. Therefore, my research projects focus on shareholders’ perceptions regarding auditing quality and earnings quality. Furthermore, I deal with private companies' audits in Germany and investigate audit quality and lenders' related perceptions.

​Perceived Audit Quality and Earnings Quality of Public FirmsHide

The separation of ownership and control in modern companies leads to agency problems due to asymmetric information and conflicts of interest. The objective of accounting is to mitigate the resulting agency costs. However, from a theoretical point of view, this goal can only be achieved if the accounting information is relevant and reliable, and thus, of high quality. In this context, auditing plays a vital role in ensuring accounting quality.

In the past years, the relevance of auditing has repeatedly been demonstrated by several accounting scandals or the financial crisis. However, the same events have called audit quality and auditor independence into question. Shareholders’ related perceptions are of the utmost relevance for the functioning of the capital market. For this reason, we investigate, for instance, whether shareholders perceive the economic importance of a client as a threat to auditor independence. At the same time, I examine whether the perceived audit quality depends on other client characteristics. For example, the client’s financial condition should be mentioned in this context.

Research subjects are capital market-oriented companies in the European and the U.S. setting. Event studies are used to find out how shareholders react to the announcement of earnings information. Besides, the impact of auditor-related variables on the costs of equity is considered.

​Shareholder Voting at Annual General MeetingsHide

The projects within this research area are intended to contribute to a deeper understanding of shareholders' assessments of the importance of earnings quality in Germany. For this purpose, I investigate voting results on the discharge of the management board and supervisory board at annual general meetings of capital market-oriented companies in Germany. I focus on the question of whether shareholders’ satisfaction with the management board and the supervisory board depends on earnings quality. Of particular interest is whom shareholders hold accountable for earnings quality.

A further issue within this research area is whether shareholders care about dividend policy. The analysis of voting results on the appropriation of the balance sheet profit at German listed companies' annual general meetings provides empirical evidence that dividend policy matters to shareholders. In particular, higher dividends up to a critical payout ratio of 50 % seem to affect shareholders’ satisfaction positively.

Audit Quality Differentiation in the German Private Firm Setting Hide

This research project focuses on the audit quality of private firms in Germany. Due to its excellent economic and social relevance, private companies in Germany represent an important field of research that has received comparatively little attention and can contribute to answering numerous innovative questions. There are only a few empirical studies regarding the actual and perceived audit quality of medium-sized and large unlisted firms in Germany.

In particular, within this research area, we investigate the particularities of the German system. Examples are the limited liability of auditors or the qualification differences between German sworn auditors and German public accountants. Moreover, we aim to gain further empirical insights on audit quality differentiation in the private firm setting.

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