We examine the effect of auditor conservatism on corporate innovation. We hypothesize that, because conservative auditors constrain income-increasing accounting discretion, managers may sacrifice long-term investments in innovation to boost current earnings and meet short-term performance targets. Exploiting state-level auditor legal liability shocks as a means of identification, we find evidence consistent with this hypothesis. Cross-sectional analyses reveal that the negative effect of increased auditor conservatism on corporate innovation is more pronounced when the client firms are under greater equity- and debt-market pressures, when the client firms are exposed to greater litigation risk, and when the client firms are audited by large auditors. Our study highlights how auditors, as external monitors, can affect not only the financial reporting quality of their clients but may also induce alterations in their real operations.

我们研究了审计师保守主义对公司创新的影响。我们假设，由于保守的审计师限制了增加收入的会计自由裁量权，管理人员可能会牺牲对创新的长期投资以增加当前收益并达到短期绩效目标。利用州级审计师的法律责任冲击作为识别手段，我们发现与该假设相符的证据。横断面分析显示，当客户公司承受更大的股权和债务市场压力时，客户公司面临更大诉讼风险时以及客户公司面临更大的诉讼风险时，审计师保守性提高对公司创新的负面影响更加明显。由大型审核员审核。我们的研究强调了审计师如何作为外部监控人员，