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Late Nights and Long Hours Don't Pay

With deadlines fast approaching, many American workers know the struggle of late nights at the office. For many auditors, it's a part of the job, thanks to shorter filing times. But staying up late to finish a project isn't necessarily a good thing, according to recent research by Associate Accounting Professor David Hurtt, and KPMG Summer Faculty Fellow and Assistant Accounting Professor Jason MacGregor.

"We wondered if an abnormally long filing time meant a more thorough job or a problematic audit with the resultant time pressures, given fixed filing deadlines," Hurtt said.

The duo asked, "Does more time also equal more pressure to be correct? Working late nights with more stress—is it a bad thing?" For example, in the education world, when a student says he or she "pulled an all-nighter" to do a project, it can be a red flag to instructors.

"Staying up all night can be proof of a problem," MacGregor said. "The quality of the work is usually at question."

The concern over loss of quality isn't just limited to students. For auditors, long hours may be a problem.

Hurtt and MacGregor's article, titled "The Relationship Between Audit Lag and Restatements," found spending more time on a project, or in this case, filing deadlines, isn't necessarily a good thing. Time pressure is a factor.

"It was a very unexpected result," MacGregor said. "Most prior work said the more time put in meant a more correct filing. But more time can also mean late nights and stress."

Hurtt and MacGregor weren't the only ones surprised by the results.

"The review process was unusually robust, "MacGregor said.

In the review process, a paper is mailed off to two independent reviewers for feedback. The review usually takes two to four months. When under review, there are three options: the reviewers don't like it and make suggestions for improvement, reviewers don't like it and refuse to publish it, or accept it to publish as it is.

In most cases, an article goes through two to three rounds of edits to get published. A three-round review process is considered long. "The Relationship Between Audit Lag and Restatements" withstood six rounds of review.

"Each time the reviewer returned [the article] with major challenges, we made the changes," MacGregor said. "The paper is better for it. Every time there was a suggestion, the results got stronger. You usually don't see that; usually, results get more conditional."

After six rounds of review, the associate editor of the Auditing Journal of Practice and Theory accepted the article for publication. It's expected to be published in the May 2014 issue.

The research started as an extension of another paper by the pair, written along with Baylor alumnus Alan Blankley, associate Accounting professor at the University of North Carolina at Charlotte. The original article, "Abnormal Audit Fees and Restatements," was published in the February 2012 issue of Auditing: A Journal of Practice and Theory. The research sought to answer the question, "When employers pay less, do accounting professionals do a worse job?"

"Interestingly, we found the phrase 'time is money' to be true; the better the pay, the better the job done," McGregor said. "The thesis was, if money behaves one way, does time behave the same way? Surprisingly, it doesn't."

In the future, the researchers hope their research will help those in the accounting profession and academia start to question irrational deadlines and what it means to do a good job.

From the regulatory perspective, it should make professionals question, 'Is quicker necessarily better But staying up late to finish a project isn't when it comes to filing deadlines?'

Jason MacGregor David Hurtt
Baylor University