We explore the challenges that digital platform-based sharing economy ventures confront in establishing legitimacy for their business models by examining the dynamics that ensued when Uber Technologies deployed its ridesharing business model in four U.S. cities. Uber entered each city to jump-start network effects by establishing cognitive legitimacy while deepening a sociopolitical legitimacy crisis that emerged due to mismatches between its business model and existing regulations. Operating between existing categories, Uber used a series of interrelated market and nonmarket strategies, which we label as liminal movement, to generate cognitive and sociopolitical legitimacy.

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SYNOPSIS We examine whether an auditor's involvement with a financial statement restatement has a negative effect on their reputation as evidenced by both clients' and the market's assessments of audit firm quality. Specifically, we investigate the effect of auditor involvement with restatements on the non-restating clients' likelihood to dismiss their auditors in the year subsequent to restatement and on non-restating clients' market adjusted returns (MARs) around the restatement announcement date. We also investigate whether the severity of the restatements has a differential effect on both variables. We find non-restating clients are more likely to dismiss auditors as the number of restatements the auditor was involved with increases, and this likelihood increases with the number of restated items. In addition, non-restating clients' MARs are significantly negative around the restatement announcement date and are more negative with more severe restatements.

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