Talent and Transparency

Vetter shares the focus of A09 on the labor aspects of information production. The project studies the labor market for accounting professionals and attempts to link labor market phenomena to reporting and assurance outcomes. Accounting professionals play a pivotal role in the production and auditing of financial information disclosed by firms. Yet very little is known about how the supply of competent, qualified, and independent accountants is determined in the labor market and how institutions shape this supply. A10 fills this gap by illuminating how the labor market for accountants operates. It has a specific focus on the role of regulation, both on the supply side (i.e., entry regulation in the form of occupational licensing) and the demand side (i.e., inelastic product demand due to audit mandates).

• Research Question

  How do labor market outcomes map into reporting quality and what shapes the labor market for accounting professionals?

• Research Motivation

  Prior literature argues that common (ethnic) backgrounds may facilitate economic interactions as shared backgrounds lower information asymmetries (e.g., Fisman et al., 2017b). This may, however, come at the cost of limiting in-dependence, a crucial attribute of high-quality audits. Which of these forces dominates is ultimately an empirical question that this work package seeks to address. Thereby, this work package aims to provide first evidence on how diversity in the audit profession may map into audit (product) markets.

• Research Program

  This project aims to broaden our understanding of the accounting labor market. Labor is considered one of the (if not the) most important input factor to any kind of financial reporting or assurance production function. While often unmodelled or treated as exogenous, labor inputs do not emerge in a vacuum. In contrast, the supply of qualified accounting professionals is determined on a labor market and subject to frictions and regulation. Thus, it is crucial to understand how this market operates.

• Research Contribution

  Overall, this project aims to contribute to the A-projects by providing valuable insights about one of the key determinants of corporate transparency: accounting professionals.