The US Department of Justice's increasing use of deferred prosecution and non‐prosecution agreements (D/NPAs) over the past two decades has sparked debate about their merits compared with traditional plea deals, which often result in criminal convictions. This study examines the factors influencing prosecutors' decisions to use D/NPAs in disciplining firms for corporate misconduct. We analyze whether the likelihood of a firm's future misconduct varies by the type of discipline imposed, comparing the effectiveness of D/NPAs to traditional prosecution. Our findings reveal that prosecutors are more likely to employ D/NPAs with firms when a criminal conviction could cause significant economic harm to stakeholders. However, firms subject to D/NPAs are more likely to commit subsequent violations compared with those entering plea deals. As D/NPAs gain traction in the United States and internationally, our research highlights a trade‐off: while D/NPAs mitigate harm to innocent stakeholders, they are less effective at deterring future misconduct than traditional prosecutions.

The IASB asserts that global stakeholder participation in the standard‐setting process is critical for developing and maintaining high‐quality accounting standards. However, the myriad languages used in countries that apply IFRS may impede this participation. We find that the IASB is less likely to receive comment letters from stakeholders in countries with languages that are linguistically distant from English. We also find that comment letters from more linguistically distant stakeholders are less likely to be quoted in IASB staff‐prepared comment letter summaries, suggesting that they have less influence in the redeliberation process. Path analyses show that this result arises from language frictions being associated with reduced writing quality and originality. We also find that language frictions prevent participation in other standard‐setting communication channels. Collectively, language frictions appear to impede the IASB's efforts to equitably obtain and consider valuable global feedback.

International standards encourage auditors to consider regulatory factors and external parties during the risk assessment process. One such external party is the taxation authority, which monitors corporate conduct and uses the threat of tax audits to constrain managerial opportunism. This study examines whether tax enforcement influences auditors' perception of the risk of material misstatement on their engagements. Using a sample of companies listed on European exchanges, we assess the strength of tax enforcement at the country level based on the number of full‐time equivalent (FTE) employees in the tax audit and verification function relative to the size of the economy. Since auditors of these European listed companies must publicly disclose key audit matters (KAMs), we use the number of KAMs to capture auditors' perceptions of client‐level misstatement risk. Our results indicate that auditors report fewer KAMs in the presence of more FTEs in the tax audit and verification function. In cross‐sectional tests, we find that this negative association is stronger in settings where auditors are more inclined to incorporate the monitoring potential of the tax authority into their risk assessment, such as in countries with high book‐tax conformity and for auditors with greater exposure to complex tax issues. These findings offer new insights into the role of tax enforcement in auditors' decision‐making and have timely implications for accounting regulators and academics studying the determinants of KAMs.