Workplace Disruptions Impact on Financial Reporting Quality

Abstract

This study provides evidence that workplace disruptions impact financial reporting quality. I use the novel setting of company headquarter relocation to study workplace disruptions. I find that workplace disruptions are negatively associated with financial reporting quality. Additionally, I find limited evidence that external auditors with more expertise and auditor selection (a closer office within the same audit firm) can partially mitigate the negative effects of workplace disruptions on financial reporting quality. Both mitigating effects are present in companies that relocate headquarters by a distance of 100 kilometers or greater. This study is relevant to financial reporting research, given the increasing frequency of workplace disruptions.