The Accounting Review· 2026Q1
National Audit Oversight and Foreign Investment
- 2citations
- Q1SCImago
- 2026year
Short summary
Establishing public audit oversight bodies (POBs) is linked to an average $11 billion increase in foreign portfolio investment (FPI) per country.
AI-generated from the title and abstract; the full text is not read.
Key points
- Countries establishing public audit oversight bodies (POBs) see an average $11 billion increase in total foreign portfolio investment (FPI).
- The positive impact of POBs on foreign investment is contingent on the POB's effectiveness in improving audit quality.
- A strong existing institutional environment amplifies the positive effect of POBs on foreign capital inflows.
- The study provides evidence of real-world economic effects stemming from auditor oversight regulation.
AI-generated from the title and abstract; the full text is not read.
Abstract
ABSTRACT Public audit oversight bodies have become ubiquitous following the establishment of the U.S. PCAOB in 2002. However, despite their cost and prominence, little is known of their economic implications, if any. We examine the relation between establishment of public audit oversight bodies (POBs) and cross-border investment. Using a difference-in-differences design, we find that after a country establishes a POB, the country attracts more foreign capital. Our results suggest that total foreign portfolio investment (FPI) increases by approximately $11 billion for the average country that establishes a POB. The impact of POBs on foreign investment is dependent on the effectiveness of the POB in improving audit quality and the strength of a country’s existing institutional environment. Our study provides evidence of real economic effects of public audit oversight around the world, which adds to the literature on auditor oversight and to the broader literature on economic consequences of regulation. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: M42; M48; F21; L51; G15; G18.
The authors' abstract, as published at the source. The Accounting Review, 2026 · DOI ↗
Continue with a free account
Ask the paper: 3 free questions a day about this paper; save it, get its citation, new summaries every day for your field. Takeaways are Premium.
Continue free on the webSign in with Google or Apple; no card needed. You come back to this paper.
On your phone:
AccountingBusiness, Management and Accounting