IDEAS home Printed from https://ideas.repec.org/a/spr/reaccs/v30y2025i3d10.1007_s11142-025-09883-7.html
   My bibliography  Save this article

Do companies realize operational benefits from engaging a competitor’s former auditor?

Author

Listed:
  • Tyler J. Kleppe

    (University of Kentucky)

Abstract

This study examines whether companies realize operational benefits from engaging a new auditor recently dismissed by a competitor. While research shows that auditors can share information across clients, there is limited research on the potential impact of auditor information spillovers on clients’ operational outcomes. I find that companies that switch to a competitor’s former auditor realize significant improvements in operating performance and that this association varies predictably with several cross-sectional factors. I also find that these improvements are driven by increases in operating margins as opposed to revenue increases and that the outcomes of these switches are influenced by characteristics of the auditors and competitor companies involved in the switches. The pattern of these findings suggests that auditors may be sharing useful information with new clients after these switches. More broadly, the results suggest that the value of an audit (auditor) extends beyond the traditional considerations of capital market participants.

Suggested Citation

  • Tyler J. Kleppe, 2025. "Do companies realize operational benefits from engaging a competitor’s former auditor?," Review of Accounting Studies, Springer, vol. 30(3), pages 3065-3109, September.
    • Handle: RePEc:spr:reaccs:v:30:y:2025:i:3:d:10.1007_s11142-025-09883-7
    DOI: 10.1007/s11142-025-09883-7
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11142-025-09883-7
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s11142-025-09883-7?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:reaccs:v:30:y:2025:i:3:d:10.1007_s11142-025-09883-7. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.