@article{38ecb95ed34b4a61aa391fc48da6baf9,
title = "Are immigrants complements or substitutes? Evidence from the audit industry",
abstract = "Extensive debate exists among policy makers and economists about the employment of highly skilled immigrants in the United States. It remains unclear whether these immigrants perform complementary tasks in addition to their substitutive role relative to native graduates. Empirical studies examining these questions in a focused setting are scarce, principally because of the nonavailability of data. We examine these questions using the audit industry as a setting because of the availability of client, city, and office characteristic data at each audit office. This setting also allows us to answer whether immigration can address the growing human capital constraint in the audit industry. We find evidence of a complementary role of highly skilled immigrants. In addition, our results indicate a reputational spillover of client restatements at the audit office level to the labor markets. Our findings have immigration and education policy implications.",
keywords = "Auditing, High-skilled immigration, Human capital, Reputation, Restatements",
author = "Daniel Aobdia and Anup Srivastava and Erqiu Wang",
note = "Funding Information: A previous draft of this paper, entitled “The Economic Impact of the Employment of Foreign-Born Graduates in the Auditing Industry,” won the best conference paper award at the 2016 American Accounting Association (AAA) Auditing Section Midyear Meeting. The authors thank Cory Cassell, Ashley Douglass, Rajib Doogar (AAA discussant), Feng Gao (Conference on Financial Economics and Accounting (CFEA) discussant), Barbara Grain (Auditing Section Midyear Meeting discussant), Jonas Heese (Financial Accounting Research System (FARS) discussant), Jayanthi Krishnan, Patricia Ledesma, Clive Lennox, Robert Magee, Linda Myers, Thomas Omer, Reining Petacchi, Jaclyn Prentice, Richard Sansing, Jaime Schmidt, Brett Trueman, Linda Vincent, Dechun Wang, and Beverly Walther; seminar participants at the 2015 AAA annual meeting, the 26th CFEA conference, the 2016 AAA Auditing Section Midyear Meeting, and the 2016 FARS meeting; and all the auditors they had discussions with for helpful comments. Tony Liu and Yichen Xu provided excellent research assistance. The authors also thank the U.S. Citizenship and Immigration Services for providing firm-level data on H-1B visas through a Freedom of Information Act request. They gratefully acknowledge financial support from their respective schools. E. Wang cowrote this paper while he was a Ph.D. candidate in accounting at Northwestern University. D. Aobdia cowrote this paper prior to joining the Public Company Accounting Oversight Board, where he was a Senior Economic Research Fellow between September 2014 and September 2016. The views expressed in this paper are his personal views and do not necessarily reflect the views of the board, individual board members, or staff of the PCAOB. Publisher Copyright: {\textcopyright} 2017 INFORMS. Copyright: Copyright 2018 Elsevier B.V., All rights reserved.",
year = "2018",
month = may,
doi = "10.1287/mnsc.2016.2707",
language = "English (US)",
volume = "64",
pages = "1997--2012",
journal = "Management Science",
issn = "0025-1909",
publisher = "INFORMS Inst.for Operations Res.and the Management Sciences",
number = "5",
}
