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Goodwill impairment, auditor dismissal and opinion shopping–evidence from China

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  • Cunyu Xing
  • Huilan Yuwen
  • Dan Yang

Abstract

Using listed companies from 2010 to 2019 in China, we investigate whether firms engage in opinion shopping activities when firms dismiss the auditors following a goodwill impairment. We find that firms tend to dismiss the incumbent auditors after receiving a goodwill impairment opinion and engage in opinion shopping with their successor auditors. Furthermore, the successor’s auditor quality is similar to the predecessor’s audit quality following a dismissal. Moreover, firms with low-quality internal control system and low analyst coverage level are more motivated to engage in opinion shopping subsequently after receiving a goodwill impairment opinion. Our findings would be of interest to corporate governance activists, auditors, investors and regulators.

Suggested Citation

  • Cunyu Xing & Huilan Yuwen & Dan Yang, 2023. "Goodwill impairment, auditor dismissal and opinion shopping–evidence from China," China Journal of Accounting Studies, Taylor & Francis Journals, vol. 11(4), pages 864-896, October.
    • Handle: RePEc:taf:rcjaxx:v:11:y:2023:i:4:p:864-896
    DOI: 10.1080/21697213.2023.2239672
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