臺大管理論叢 NTU Management Review VOL.30 NO.2

The Effect of the Dual-Signature Requirement on Audit Quality 28 “ LOSS ” is an indicator variable for accounting losses, equaling 1 if the company incurred a loss, and 0 otherwise; and “ BIGN ” is an indicator variable with a value of 1 if the company was audited by one of the Big 8 CPA firms. The addition of an eighth indicator includes variables which control the effects of different industries. The expectation is that the coefficient of DUAL would be positive and significant. In addition to examining the effects of dual-signatures, this study further examines the incremental effects of whether the clients are publicly traded companies on auditor behaviors. To test H2, equation (2) is estimated: MAO = β 0 + β 1 DUAL + β 2 PUBLIC + β 3 PUBLIC*DUAL + β 4 SIZE + β 5 LEV + β 6 CURR + β 7 LOSS + β 8 BIGN + INDUSTRY + ε, (2) “ PUBLIC * DUAL ” is the interaction term between “ DUAL ” and “ PUBLIC ”. The other variables in the equation (2) are defined in the previous equation (1). The expectation of the coefficient in the interaction term between “ DUAL ” and “ PUBLIC ” is to be positive and significant. 3.3 Additional Test In addition to audit opinions, this study tests if earnings in dual-signature reports have more information content than in single-signature reports. Two multivariate regression models, as described in additional equations (3 and 4), are estimated. CAR = β 0 + β 1 EARN + β 2 DUAL + β 3 EARN*DUAL + Σ β 3 + j EARN*CV + Σ β 7+j CV + ε , (3) CAR = γ 0 + γ 1 EARN + γ 2 UEARN + γ 3 DUAL + γ 4 EARN*DUAL + γ 5 UEARN*DUAL + Σ γ 5 + j EARN*CV + Σ γ 9 + j UEARN*CV + Σ γ 13+j CV +. (4) In equations (3) and (4), “ CAR ” is cumulative abnormal returns over a 12-month period, running from May of year t-1 to April of year t. “ EARN ” is the income from continuing operations scaled by the market value of equity. “ UEARN ” is the change in income from continuing operations between year t and year t-1, scaled by the market value of equity. “ DUAL ” is an indicator variable that equals 1 for dual-signature