Auditor switch decisions under forced auditor change: evidence from China

Abstract

Purpose – From 2000 to 2007, 14 Chinese accounting firms had their audit licenses terminated or suspended for different reasons, forcing clients of these accounting firms to select new auditors within a short period of time. The purpose of this paper is to examine the auditor switching patterns and audit partner following decision of these clients and the effect of both client and (terminated or suspended) auditor characteristics on the auditor change decisions. Design/methodology/approach – By using 245 (191) clients of terminated or suspended audit firms, the authors apply logistic regressions to investigate clients’ switching decision (following decision). Findings – The empirical results indicate that state-owned enterprises tend not to switch to Big 4 audit firms; clients with dual shares tend to choose from the Big 4 for their succeeding audit firms. Moreover, companies whose preceding auditors received severe regulatory sanctions are less likely to switch to auditors of higher quality; companies who hired local auditors are more likely to follow their preceding audit partners as a result of forced auditor change. Originality/value – This study enriches forced auditor change literature by discussing both clients’ and preceding auditor’s attributes on clients’ switching and following decisions.

Capital market liberalization and auditors' accounting adjustments: Evidence from a quasi‐experiment

“…They argue that the decline in demand for high-quality audits (Big-4 auditors) is attributable to decreases in foreign ownership of these B-share firms. Similarly, Kuo et al (2016) find that client firms with dual shares (A and B/H shares) are more likely to choose Big-4 audit firms as their succeeding audit firms once the audit licenses of their prior audit firms are terminated and suspended.…”

Peran Tekanan Anggaran Waktu Auditor Dalam Memoderasi Effort Dan Kinerja Audit Judgment

“…Brown, Gissel, & Neely (2016) ber pendapat bahwa sejumlah usaha/upaya kognitif (perencanaan, pelaksanaan, dan evaluasi) yang diberikan dalam melak sanakan tugas dapat lebih ditingkatkan baik melalui lamanya upaya yang diberikan (con toh melaksanakan tugas lebih lama waktu nya) atau intensitas dan frekunsi u paya/ u saha (contoh: bekerja lebih keras, seri us dan penuh konsentrasi), atau melalui keduanya yaitu baik durasi/lamanya dan intensitas frekuensi usaha. Riset dari Lam bert, Jones, Brazel, & Showalter 2017 (Kuo, Lin, & Lin, 2016;Setiawaty, 2013). Pengujian ini memberikan keyakinan bahwa tekanan anggaran waktu auditor dapat memperkuat atau memperlemah hubungan antara effort dan kinerja pertimbangan audit.…”