Opinion Shopping and Audit Committees
AbstractThis paper tests whether companies engage in opinion shopping and examines the role of audit committees when auditors are dismissed (1996-98). There are three findings. First, US companies strategically dismiss when incumbent auditors are more likely to issue unfavorable audit opinions compared to newly appointed auditors. I estimate opinion shopping motivates 17% of auditor dismissals, and I find opinion shopping dismissals occur significantly later in the reporting period than other dismissals. Second, audit committees are more likely to disapprove of auditor dismissals that are motivated by opinion shopping. This is consistent with the argument that audit committees help maintain the integrity of the audit reporting process. Third, independent audit committee members are more likely to leave committees that disapprove of opinion shopping. This suggests either senior management dismiss audit committee members who oppose opinion shopping, or committee members resign because they do not wish to be associated with opinion shopping.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University in its series CEI Working Paper Series with number 2002-12.
Length: 38,  p.
Date of creation: Sep 2002
Date of revision:
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Reiko Suzuki).
If references are entirely missing, you can add them using this form.