Dissertation: Essays on internal control and external auditing in the context of financial ...

– The truthfulness and reliability of companies’ financial reporting is essential for the decision-making of stakeholders and hence for economic functionality, Myllymäki explains.

The first two essays of the dissertation focus on internal control over financial reporting, while the last two essays study audit quality. Three essays use data on US listed companies, and the fourth essay uses data on Finnish listed companies.

The findings of the first essay indicate that companies disclosing internal control weaknesses have greater likelihood of low financial reporting quality still two years after the last disclosure.

The second essay continues in the field of internal controls and finds that companies with internal control weaknesses are manipulating real operational activities to manage earnings.

The findings of the third essay imply lower audit quality, when the incumbent audit firm provides also tax services to the client. The fourth essay examines auditors’ specialization in auditing publicly listed companies, and the results suggest that this type of specialization has a positive impact on the financial reporting quality of public clients.

All in all, the findings of this thesis provide new evidence both on the pervasive nature of internal control weaknesses, and on external audit quality from the perspective of auditor independence and auditor specialization.

Public defence

The public examination of M.Sc. Emma-Riikka Myllymäki’s doctoral dissertation “Essays on Internal Control and External Auditing in the Context of Financial Reporting Quality” is on Tuesday 5 May at 16 o´clock in auditorium Kurtén (C203, Tervahovi). Professor Marleen Willekens (University of Leuwen, Belgium) will act as opponent and professor Teija Laitinen as custos.

Publication orders and pdf