Person: Trombetta, Marco
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Marco
Last Name
Trombetta
Affiliation
IE University
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IE Business School
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Accounting and Management Control
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Publication Mandatory Audit Firm Rotation and Audit Quality(Taylor & Francis, 2014-06-02) Sissons, Amanda; Trombetta, Marco; https://ror.org/02jjdwm75In a setting where mandatory audit firm rotation has been effective for more than 20 years (i.e., Italy), we analyse changes in audit quality during the auditor engagement period. In our research setting, auditors are appointed for a three-year period and their term can be renewed twice up to a maximum of nine years. Since the auditor has incentives to be reappointed at the end of the first and the second three-year periods, we expect audit quality to be lower in the first two three-year periods compared to the third (i.e. the last) term. Assuming that a better audit quality is associated with a higher level of accounting conservatism, and using abnormal working capital accruals (AWCA) as a proxy for the latter, we find that the auditor becomes more conservative in the last three-year period, i.e. the one preceding the mandatory rotation. These results are confirmed using Basu’s (1997) timely loss recognition model. In an additional analysis, we use earnings response coefficients as a proxy for investor perception of audit quality, and we observe results consistent with an increase in audit quality perception in the last engagement period.Publication The Effects of Auditor Social and Human Capital on Auditor Compensation: Evidence from the Italian Small Audit Firm Market(Taylor & Francis, 2019-07-29) Pietro A., Bianchi; Trombetta, Marco; Carrera, Nieves; https://ror.org/02jjdwm75This study examines whether social and human capital influence the compensation of individual auditors in the small audit firm market. We employ a sample of Italian auditors and use measures from the network and auditing literatures to capture their professional connections, representing social capital, and their industry expertise, representing human capital. Our findings show a positive and economically meaningful association between these individual attributes and auditor compensation. We run several tests to address potential endogeneity issues in our research design. Our results suggest that, in the small audit market, clients perceive as valuable those auditors with higher social and human capital, and as a result, are willing to pay a premium for these specific auditor attributes.Publication Small is big! The role of 'small' audits for studying the audit market(FEA, 2018) Trombetta, Marco; Carrera, Nieves; https://ror.org/02jjdwm75[No abstract available]Publication The dynamic of financial crises and its non-monotonic effects on earnings quality(Elsevier, 2014-05-01) Imperatore, Claudia; Trombetta, Marco; https://ror.org/02jjdwm75Despite the wealth of research examining earnings quality and earnings management, we still have much to learn about the effects of macroeconomic factors on accounting discretion’s decisions; the recent financial crises may be one of such factors. Nevertheless, the extant literature is inconclusive about the direction of the relationship between earnings quality and economic downturn. In this study, we focus on the extent to which organizational survival may be an objective of earnings management. In this manner, we add to research considering earnings target as an objective of earnings manipulation. Furthermore, our results suggest that these objectives likely change as crisis becomes worse. Consequently, we argue that the relationship between financial crises and earnings management is non-monotonic. Earnings management decreases when the intensity of the crisis is low, while it increases when the crisis is acute.