ABSTRACT Prior research suggests that even for the same decision task there will be variation in decision outcomes across decision makers due to idiosyncrasies in their styles. This variation brings up a fundamental challenge in the realm of regulations, where consistency of application is of great importance. This study examines whether the idiosyncrasies of individual employees of the SEC contribute to inconsistent regulatory outcomes. Using a sample of SEC comment letters, we show that SEC reviewers' idiosyncratic style plays a significant role in explaining the cross‐sectional variation in filing review outcomes, even after holding firm and disclosure attributes constant. In addition, the likelihood of restatement during the review process varies systemically with the reviewers' review style. These findings suggest that reviewer style influences shareholders and other stakeholders via its impact on the costs in resolving comment letter issues and the quality of corporate disclosure. They also have public policy implications for the way financial reporting rules and regulations are applied.

ABSTRACT Policies and procedures that centralize decision making within an audit firm create auditor style effects. Prior research suggests this style increases financial-statement comparability, implicitly making financial statements more useful. However, a potential hazard of auditor style is the propagation of decision errors. We examine the association between auditor style and common disclosure issues among audit clients. We measure auditor style as the presence of a common auditor and use comments given in the Securities and Exchange Commission’s (SEC’s) filing-review process to measure the occurrence of common disclosure issues. We find that auditor style is associated with common disclosure issues among Big 4 clientele. We also find that clients with the same auditor converge in issues as tenure increases and some evidence that clients assume the issues of a subsequent auditor. These results provide the first evidence that auditor style has potential costs in the form of common disclosure issues. Data Availability: All data are publicly available. JEL Classifications: M41; M42.

ABSTRACT Literature to date reveals relatively little about the role of expertise in auditor selection beyond basic preferences for Big 4 and industry specialist auditors. We hypothesize that audit committees whose members have no Big 4 auditing experience are likely to struggle when interviewing prospective Big 4 partners, leading such committees to draw on superficial, heuristic cues in lieu of conducting more substantive evaluations. To test this prediction, we obtain independent ratings of the facial attractiveness of audit partners identified from Form AP filings recently mandated by the US PCAOB. Our primary finding is that audit committees with no Big 4–experienced members are more likely to favor partners whose photographs raters view to be highly attractive. We characterize attractiveness as a superficial attribute for auditor selection because we detect no relation between attractiveness and accruals‐ or restatement‐based measures of financial reporting quality for audit committees with one or more Big 4–experienced members. We do find an inverse association between attractiveness and financial reporting quality for committees without this experience, likely reflecting the statistical implication of a selection bias. We conclude that auditing expertise mitigates the influence of superficial considerations in auditor selection, enabling audit committees to fulfill their stewardship role more effectively.