John Christian Langli holds a Ph.D. from The Norwegian School of Economics (NHH) and is Professor of Business Economics at the Department of Accounting and Operations Management at BI The Norwegian School of Business. He also serves as Head of Department of Accounting and Operations Management. His research interests are empirical reserach in financial accounting, auditing and corporate governance.
Recent accounting scandals have triggered renewed interest in the debate concerning whether audit firms should be banned from providing consulting services. Compared to the voluminous studies on consulting services to audit clients (i.e., non-audit services,hereafter NAS), little has been done to investigate consulting services to non-audit clients(hereafter CS). This study examines whether audit partners’ revenues from CS are associated with: i) partners’ compensation, and ii) audit quality (AQ), while controlling for revenues from NAS and auditing. We choose the Norwegian setting because of the unique and proprietary data on CS at the audit partner level. Our results provide initial evidence that partners’ compensation is positively associated with their revenues generated from CS. Regarding AQ, our findings indicate no relation between AQ and partners’ revenues from CS. This study contributes to the recent debate on multidisciplinary audit firms and should be of interest to regulators, audit firms, and users of audited financial statements.
Che, Limei; Hope, Ole-Kristian & Langli, John Christian (2020)
This paper studies whether and how Big-4 firms provide higher-quality audits than non-Big-4 firms. Specifically, we first examine a Big-4 effect and then explore three sources of the Big-4 effect. To test the Big-4 effect, we use a unique data set of individual audit partners for a large sample of private companies and a novel research design exploiting the fact that auditees may follow the auditor who switches affiliation from a non-Big-4 firm to a Big-4 firm. Thus, we compare audit quality and audit fees of the same partner–auditee pairs before and after the switch. The results show that the Big-4 effect exists in the private-firm segment. More important, we find evidence for three sources of the Big-4 effect. First, Big-4 firms are able to recruit non-Big-4 partners who deliver higher audit quality than other non-Big-4 partners in the preswitch period. Second, enhanced learning has taken place after the switch. Third, the increased audit quality can also be attributed to stronger incentives/monitoring. These are new findings to the literature.
Analyser av foretaks finansielle stilling og inntjening skjer som regel ved hjelp av finansielle nøkkeltall som tallfester lønnsomhet, likviditet og soliditet. I denne artikkelen viser jeg først hvordan noen nøkkeltall i hver av disse tre kategoriene, beregnet på grunnlag av årsregnskapene til norske aksjeselskaper (dvs. ikke børsnoterte foretak), utvikler seg over tid. Jeg viser at mål på lønnsomhet (total- og egenkapitalrentabiliteten) og soliditet (målt ved leverage, som er forholdet mellom sum eiendeler og sum egenkapital) går mot gjennomsnittsverdiene for økonomien som helhet. Det er som forventet siden det finnes teorier for avkastningskrav og optimal kapitalstruktur, og konkurransen vil drive forholdstallene mot de teoretiske verdiene. Forholdstall som mangler et teoretisk fundament for hvor optimum er (som likviditetsgrad 1 og totalkapitalens omløpshastighet), viser ikke samme tendens til å gå mot gjennomsnittet. Bransjeforskjeller er det andre hovedtemaet i artikkelen. Det er mange eksempler på at normtall for hva som skal til for at lønnsomheten eller likviditeten er tilfredsstillende eller god, blir fastsatt uten å ta hensyn til bransjeforskjeller. Det best kjente kravet er at likviditetsgrad 1 bør være større enn 2, et krav som ble fastsatt for over 100 år siden. Jeg dokumenterer store bransjeforskjeller i gjennomsnittsverdier og medianverdier for nøkkeltallene, og viser at generelle krav til hva normtall bør være, kan være lite relevante.
Downing, Jeff & Langli, John Christian (2019)
Audit exemptions and compliance with tax and accounting regulations
We examine small firms’ compliance with tax and accounting regulations before and after a change in the threshold for mandatory auditing. Prior to 2011, all Norwegian firms were required to be audited. In 2011, a law change allowed small Norwegian firms to choose not to be audited. After this change, the Norwegian Directorate of Taxes conducted on- and off-site inspections of a representative sample of 2117 Norwegian firms, with a focus on compliance with specific requirements in tax and accounting regulation. We use the results from these inspections to construct a compliance quality score (CQS). We find that the firms that chose to opt out of auditing have lower CQS than do firms that chose to continue to be audited; that the CQS of firms that chose not to be audited declined after opting out; and that some of the opt-out firms fully mitigated the decline in CQS by engaging external accountants or auditors to prepare their annual financial statements. The results should be of interest to regulators considering increasing the thresholds for mandatory auditing, as our results show that (i) firms that choose not to be audited can experience a decline in CQS after opting out and (ii) CQS can be maintained at the same level as before if opt-out firms engage external consultants that assist in preparing the annual accounts.
Langli, John Christian & Willekens, Marleen (2018)
This paper examines how audit effort, measured by the estimated number of audit hours used to perform the clients' audits, is associated with engagement partners' formal education, continuing professional education (CPE), and professional experience. Although the literature provides considerable evidence for the determinants of audit fees, our understanding of how audit effort is related to these partner characteristics is limited. The aim of this paper is to shed light on partner specific factors that may influence how much audit effort they and their team members exert. Using a sample of 1,738 unique partners and 178,770 client-year observations, we find evidence that auditors with a master's degree exert more effort than those with a bachelor's degree. We also find a positive relation between audit effort and CPE. The relation between audit effort and professional experience is non-linear: the least experienced auditors put in the least effort, moderately experienced auditors exert the most effort, while the effort level of the most experienced auditors is in between. We also document that the accuracy of going concern modified audit reports is higher for more knowledgeable auditors.
Langli, John Christian & Che, Limei (2016)
Har fravalg av revisor ført til dårligere finansieringsvilkår?
En rekke aksjeselskaper (ASer) valgte bort revisor i 2011. Dersom fravalget av revisor påvirket bankenes eller kreditorenes risikovurdering, er det rimelig å forvente at selskapene som valgte bort revisor vil få høyere lånerente eller dårligere tilgang til kreditt etter fravalget. Vi undersøker utviklingen fra 2010 til 2012 for ASer som kvalifiserte for fravalg i 2011. Resultatene er entydige. Vi finner ingen tegn til negative finansieringseffekter for de som valgte bort revisor i 2011 sammenliknet med de som beholdt revisor.
Langli, John Christian (2016)
Resultatføring av inntekter og kostnader før og etter fravalg av revisor i små AS : tyder utviklingen på økte skatteunndragelser?
Hvis selskaper som velger bort revisor begynner å selge svart eller kreve fradrag for fiktive eller private utgifter etter fravalget av revisor, vil de ha en lavere vekst i omsetningen eller en svakere utvikling i driftsresultatet enn sammenliknbare selskaper som har beholdt revisor. Jeg tester om disse to effektene er observerbare hos AS som har valgt bort revisor i årene 2011–2014. Resultatene er entydige: Omsetningsveksten er minst like høy og utviklingen i driftsresultatet minst like god hos fravalgselskapene som hos sammenliknbare selskaper som har beholdt revisor, hvilket ikke er som forventet dersom fravalgselskapene begynner å unndra skatt etter fravalget. En rekke sensitivitetsanalyser, inklusiv analyser av selskaper etablert etter kravene til aksjekapital ble redusert med virkning fra 1.1.2012, rokker ikke ved konklusjonen.
Che, Limei & Langli, John Christian (2015)
Governance Structure and Firm Performance in Private Family Firms
Although a large proportion of firms are family owned and most family firms are private, our understanding of private family firms is limited. Using confidential information on family relationship between board members, CEOs, and shareholders, this is the first study that provides large-scale evidence on the association between governance structure and firm performance in family controlled private firms. Our sample is unique as it covers almost all private limited liability firms in Norway, spans 11 years, traces firm ownership to ultimate owners, and identifies family relationship using data on kinship, marriage, and adoption. The results show a U-shaped relationship between family ownership and firm performance. Higher ownership of the second largest owner, higher percentage of family members on the board, stronger family power, and smaller boards are associated with higher firm performance. In addition, the positive association between the ownership of the second largest owner and firm performance also occurs when the second largest owner is a member of the controlling family, but the association is stronger when the second largest owner is a non-family member. We further test the relative importance of these test variables and find that ownership structure is more associated with firm performance than board structure.
Langli, John Christian & Svanstrøm, Tobias (2014)
Audits of private companies
, s. 148- 158.
Hope, Ole-Kristian; Langli, John Christian & Thomas, Wayne B. (2012)
We are interested in understanding how agency conflicts in private firms arise through ownership structures and family relationships. Specifically, we analyze auditors’ increase of effort and firms’ choice of auditors in situations with higher level of agency conflicts. For a large sample of private firms, we use unique and confidential data (obtained through special permission by the government) to measure direct and ultimate ownership for each shareholder as well as extended family relationships (based on marriage and blood lines, going back four generations and extending out to fourth cousin) among all shareholders, board members, and CEOs. We first find that audit fees, our proxy for audit effort, vary as hypothesized with firmlevel characteristics related to ownership structures and family relationships. Second, we find evidence that firms in higher agency cost settings respond by having their financial statements audited by a higher-quality auditor (i.e., a Big 4 firm). However, for CEO family-related settings (i.e., where the CEO is related to the major shareholder or as the number of board members related to the CEO increases), we find no evidence of a greater demand for a Big 4 auditor.
Langli, John Christian (2011)
Kjønnskvoterte styrer. Om virkninger av kravet til likestilling i styrene i allmennaksjeselskapene
(4) , s. 67- 92.
Hope, Ole-Kristian & Langli, John Christian (2010)
Auditor Independence in a Private Firm and Low Litigation Risk Setting
Hvem er brukerne av årsregnskapene til små aksjeselskaper, og trenger de reviderte regnskaper?
25(1) , s. 104- 119.
Langli, John Christian (2007)
Konsekvenser av bevisst og utbevisst rot med bokføringen i fortid og fremtid
10(6) , s. 32- 48.
Langli, John Christian & Saudagaran, Shahrokh (2004)
Taxable Income Differences Between Foreign and Domestic Controlled Corporations in Norway
13(4) , s. 713- 742.
Langli, John Christian (2001)
Konkurskriminalitet i Norge
Langli, John Christian (1998)
Accounting Diversity and Firm Valuation
33(5)
Langli, John Christian & Stenheim, Tonny (2024)
Norske regnskapsstandarder og deres rettslige status
[Professional Article]. 40(3) , s. 260- 274.
Langli, John Christian & Stenheim, Tonny (2023)
Hvordan bør arbeidet med nasjonale regnskapsstandarder organiseres og finansieres?
[Professional Article]. (2)
Langli, John Christian (2018)
Fra bilag til bruk. Innføring i finansregnskap og regnskapsanalyse
[Textbook].
Che, Limei & Langli, John Christian (2017)
Audit Quality and Partner Wealth
[Conference Lecture]. Event
Che, Limei; Hope, Ole-Kristian & Langli, John Christian (2017)
Does the Big-4 Effect Exist in Private-Client Segment? Evidence from Audit-Partner – Auditee Pair Switches
[Conference Lecture]. Event
Che, Limei & Langli, John Christian (2017)
Audit Quality and Partner Wealth
[Conference Lecture]. Event
Langli, John Christian & Willekens, Marleen (2017)
Tax Avoidance, Ownership Patterns and High-Quality Auditing in Private Firms.
[Conference Lecture]. Event
Langli, John Christian; Hope, Ole-Kristian & Che, Limei (2016)
Does the Big-4 effect exist? Evidence from Audit-Partner Switches
[Conference Lecture]. Event
Che, Limei; Hope, Ole-Kristian & Langli, John Christian (2016)
Does the Big-4 Effect Exist When Reputation and Litigation Risks are Low? Evidence from Audit-Partner – Auditee Pair Switches
[Conference Lecture]. Event
Hope, Ole-Kristian; Che, Limei & Langli, John Christian (2016)
Does the Big-4 Effect Exist when Reputation and Litigation Risks are Low? Evidence from Audit-Partner – Auditee Pair Switches
[Conference Lecture]. Event
Che, Limei; Hope, Ole-Kristian & Langli, John Christian (2016)
Does the Big-4 Effect Exist? Evidence from Audit-Partner Switches
[Conference Lecture]. Event
Che, Limei; Hope, Ole-Kristian & Langli, John Christian (2016)
Does the Big-4 Effect Exist? Evidence from Audit-Partner Switches
[Conference Lecture]. Event
Che, Limei; Hope, Ole-Kristian & Langli, John Christian (2016)
Does the Big-4 Effect Exist When Reputation and Litigation Risks are Low? Evidence from Audit-Partner – Auditee Pair Switches
[Conference Lecture]. Event
Downing, Jeff & Langli, John Christian (2015)
Auditor Choice and Accounting-System Quality
[Conference Lecture]. Event
Langli, John Christian (2015)
Introducing voluntarily audit for small private limited liability firms: Evidence from Norway
[Conference Lecture]. Event
Langli, John Christian (2015)
Evaluering av unntak for revisjonsplikt i små aksjeselskaper
[Lecture]. Event
Che, Limei & Langli, John Christian (2015)
Audit quality and partner wealth
[Conference Lecture]. Event
Langli, John Christian (2015)
Evaluering av unntak for revisjonsplikt i små aksjeselskaper
[Report Research].
Langli, John Christian (2015)
Evaluering av unntak for revisjonsplikt i små aksjeselskaper
[Lecture]. Event
Langli, John Christian & Che, Limei (2014)
Family involvement and firm performance in private family firms
[Conference Lecture]. Event
Che, Limei & Langli, John Christian (2014)
Family involvement and firm performance in private family firms
[Conference Lecture]. Event
Che, Limei & Langli, John Christian (2013)
Agency conflicts and firm performance in private family firms
[Conference Lecture]. Event
Langli, John Christian (2012)
Patterns of Executive Compensation in Private Family Firms
[Conference Poster]. Event
Langli, John Christian (2012)
Kjønnsubalanse på toppen i næringslivet
[Lecture]. Event
Langli, John Christian (2012)
Patterns of Executive Compensation in Private Family Firms
[Conference Lecture]. Event
Langli, John Christian (2012)
Gender Quotas for Boards. On the impact of requirements for equal opportunity for boards of public limited companies
[Conference Lecture]. Event
Langli, John Christian; Kvaal, Erlend & Mohammad, Abdolmohammadi (2011)
Earnings Management Priorities of Private Family Firms
[Conference Lecture]. Event
Hope, Ole-Kristian; Langli, John Christian & Thomas, Wayne B. (2011)
Agency Conflicts and Auditing in Private Firms
[Conference Lecture]. Event
Langli, John Christian; Kvaal, Erlend & Mohammad, Abdolmohammadi (2011)
Earnings Management Prioritites in Private Familiy Firms
[Conference Lecture]. Event
Langli, John Christian (2010)
Agency Conflicts and Auditing in Private Firms
[Conference Lecture]. Event
Langli, John Christian (2010)
Earnings Management Priorities of Private Firms
[Conference Lecture]. Event
Langli, John Christian; Hope, Ole-Kristian & Thomas, Wayne B. (2010)
Agency Conflicts and Auditing in Private Firms
[Report Research].
Abdolmohammadi, Mohammad; Kvaal, Erlend & Langli, John Christian (2010)
Earnings Management Priorities of Private Family Firms
[Report Research].
We compare earnings management priorities of private family and private non-family firms. Our study is made possible by the availability of a new and unique database on family relationships between CEOs, board members and owners of private Norwegian firms. We hypothesize and find that compared with private non-family firms, private family firms are likely to manage earnings downward. However, we also find that highly leveraged private family firms make more income increasing accounting choices than highly leveraged private non-family firms. Finally, we document that CEOs representing controlling families promote earnings management, and independent board members somewhat mitigate it. We note that research on the relationship between financial reporting quality and family governance is quite limited. We contribute to this emerging literature.
Langli, John Christian (2010)
Agency Conflicts and Auditing in Private Firms
[Conference Lecture]. Event
Hope, Ole-Kristian & Langli, John Christian (2009)
Er høye honorarer for revisjon og rådgivning en trussel mot uavhengigheten?
[Professional Article]. 25(4) , s. 55- 63.
Langli, John Christian (2008)
Auditor Independence in a private firm and low litigation risk setting
[Conference Lecture]. Event
Langli, John Christian (2008)
Auditor Independence in a private firm and low litigation risk setting
[Conference Lecture]. Event
Langli, John Christian (2005)
Regnskapskvalitet - om hvordan regnskapsmessig støy svekker kvaliteten på regnskapsinformasjon
[Professional Article]. (1) , s. 49- 62.
Tellefsen, Jan Terje & Langli, John Christian (2004)
Årsregnskapet
[Textbook].
Høyvarde, Hans Kristian & Langli, John Christian (2001)
Studiehefte til årsregnskapet
[Textbook].
Høyvarde, Hans Kristian & Langli, John Christian (2001)
Studiehefte til årsregnskapet
[Textbook].
Tellefsen, Jan Terje & Langli, John Christian (2001)
Årsregnskapet
[Textbook].
Langli, Jon Christian (1999)
Flytting av overskudd mellom land i flernasjonale selskaper: Hvilken rolle spiller selskapenes internprising?
[Professional Article]. (4)
Langli, John Christian (1999)
Flytting av overskudd mellom land i flernasjonale selskaper: Hvilken rolle spiller selskapenes internprising?
[Professional Article]. (4)
Langli, John Christian & Ramnefjell, Per Espen (1998)
Konkurs! Oppfatninger om konkurskriminalitet og konkursinstituttets virkemåte blant aktører involvert i avdekking og etterforskning av staffbare forhold
