Analysis of the US credit union industry

Thesis (Ph.D.)--Massachusetts Institute of Technology, Sloan School of Management, 2000.Includes bibliographical references (leaves 86-92).The first paper examines the determinants of credit unions' audit quality choice and the implications of this choice on financial statement management and financial distress. Credit unions provide a setting with large variation in audit quality, ranging from a "self audit" to an independent CPA audit. I find credit unions select higher audit quality if faced with higher business risk, size and agency costs. Audit quality is inversely associated with the probability of earnings management but is not associated with other forms of financial statement management. However, audit quality is not associated with an increased likelihood of financial distress or failure. My findings suggest that other forms of monitoring, such as regulatory examinations, may substitute for low audit quality. Accordingly, mandating higher audit quality alone may not have a substantial effect on the quality of reported financial results or the likelihood of financial distress. The second paper examines performance evaluation in the credit union setting. Using data from a moderate-sized credit union, the essay employs a case-study approach to examine the role of annual budgeting, pricing of services, and compensation.by Elizabeth Krahmer Keating.Ph.D