Mary F. Allen (Boise State University) Mark Linville (Kansas State University) David M. Stott (Bowling Green State University)
Abstract
We examine the role of past litigation in the selection of independent auditors. Using a sample of persons typically involved in auditor selection, we find that any litigation announcement alleging audit improprieties greatly reduces the auditorÕs likelihood of hire regardless of the type of legal action announced or the degree of direct involvement by the auditor. Based on these findings, litigation imposes an indirect (and potentially substantial) cost by impeding the CPAÕs ability to attract new clients.
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Publisher Info
Article provided by American Journal of Business (Formerly Named "Mid-American Journal of Business") in its journal American Journal of Business.
Volume (Year): 20 (2005) Issue (Month): 1 () Pages: 37-45 Download reference. The following formats are available: HTML,
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