Strategic auditor switch and financial distress prediction–empirical findings from the TSE-listed firms

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Title:	Strategic auditor switch and financial distress prediction–empirical findings from the TSE-listed firms
Authors:	Chen, Ching-lung;Yen, Gili;Chang, Fu-hsing
Contributors:	淡江大學會計學系
Date:	2009-01
Issue Date:	2011-10-20 12:44:15 (UTC+8)
Publisher:	Abingdon, Oxon: Routledge
Abstract:	Out of reputation and audit risk considerations, the incumbent auditor may not be willing to accommodate the unreasonable request from the client with deteriorating financial conditions. On the other hand, the client may switch the auditor to solicit a clean audit opinion from the successive auditor. Viewed from such a perspective, the main proposition is that firms with auditor change subsequently have a higher probability of incurring financial distress. The main proposition has gained strong empirical support in alternative estimation models. The authors therefore conclude that the incorporation of the variable ‘auditor change’ can greatly enhance the predictive power of previous financial distress prediction models.
Relation:	Applied Financial Economics 19(1), pp.59-72
DOI:	10.1080/09603100701222259
Appears in Collections:	[Graduate Institute & Department of Accounting] Journal Article

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