Research Programme

The ACA Research Group does research on issues related to auditing, corporate governance, management accounting and the identification and reorganization of financially distressed companies. The research of the group contributes with knowledge on issues that are of interest for auditors, companies, as well as creditors and other parties that must identify the credit risk of companies or develop their control and accounting systems.

The group consists of PhD students, post doc researchers and professors. The members of the group also co-operate with researchers from a large number of countries including Australia, UK, US, Denmark, Norway, Spain and Sweden. The group has participated actively in the training of auditors on issues related to failure prediction as well as participated in committees and working groups on auditing related issues. The members have also been involved in authorized auditor examinations and executive education.  Research findings have been published in high quality accounting and auditing journals, including Journal of Accounting Research, Contemporary Accounting Research, Accounting Horizons, Management Accounting Research, Critical Perspectives on Accounting, European Accounting Review, Accounting and Business Research, International Journal of Auditing and Managerial Auditing Journal. Most of the empirical research is quantitative, but some researchers do also qualitative and experimental research. The research group has organized a number of AFAR (Auditing and Financial Accounting Research) workshops at which primarily PhD students from Finland and neighboring countries have presented their research.

The major objective of the research is to gain an understanding of (i) the functioning of the markets for audits and non-audit services as well as factors associated with audit quality, (ii) corporate governance and internal controls in companies as well as their relations to performance and earnings quality, and (iii) the identification and the reorganization of financially distressed companies, and (iv) management accounting practices. Below these research areas are presented in more detail.

1. Audit research

Audits have been described as a quality differentiated service and a central question in the research is to gain an understanding of factors associated with the quality of audits. The research also examines how financial ratios and other variables can be used to detect ongoing concern problems in companies as well as auditors’ reporting of companies’ ongoing concern problems prior to bankruptcy. Furthermore, the research examines the usefulness of audit reports for creditors and for other users of accounting and auditing information as well as the pros and cons of allowing auditors to supply consulting and other non-audit services. The behavioral auditing research conducted in the group examines factors associated with auditors’ information usage as they are about to accept new clients or decide whether to continue to audit an existing client.

2. Corporate governance and internal control research

The corporate governance research examines, among other things, the relationships between internal control effectiveness and operating performance as well as earnings quality. Furthermore, the research focuses on the effects of company characteristics on internal control, factors associated with fraud risk in companies as well as the role and functioning of “whistle blowing” provisions in companies’ code of conduct.

3. Research on the identification and the resolution of financial distress

The research focus is on how financial ratios and other variables can be used to predict financial distress as well as how the possibilities to predict financial distress vary between countries. Another target with the research is to gain an understanding of differences between bankrupt companies and companies eligible for a court supervised reorganization, as well as the efficiency of the reorganization process in Finland.

4. Management accounting practices

The research focus is on new management accounting practices and roles of accountants in future organizations. Furthermore, the research focus on development and change and its’ implications in management accounting and accounting work. We use qualitative (case and field studies) and quantitative (survey) approaches in conducting research. We both use interpretative theories to understand practices as well as aim to theory development in management accounting.