Forced Audit Firm Change, Continued Partner‐Client Relationship, and Financial Reporting Quality

Jieping Chen (First Author), Xijia Su (Participant Author), Xi Wu (Participant Author)

科研成果: 期刊稿件期刊论文

22 引用 (Web of Science)

摘要

This study extends Blouin et al. ([BGR] 2007) by providing partner-level evidence regarding the effect of continued auditor-client relationships on financial reporting quality over a three-year post-switch period. Using a sample of forced audit firm changes in China where the identities of leading audit partners are available, we find that, consistent with BGR (2007), clients with greater earnings management activities are more likely to follow their former audit partners to a new audit firm, and aggressive follower clients who are audited by former partners are less likely to report abnormally high earnings management items in the first post-switch year. Moreover, we find that the financial reporting of aggressive follower clients who continue to be audited by former partners becomes significantly more aggressive in the next two post-switch years; while aggressive follower clients who are audited by non-former partners do not exhibit a similar pattern in the three post-switch years. Our findings indicate that the former partner conservatism as suggested by BGR (2007) may be temporary in nature, and former partners may adopt a strategic approach to auditing follower clients to realize the opportunistic benefits of maintaining a close partner-client relationship.
源语言英语
页(从-至)227-246
期刊Journal of Practice and Theory
28
2
DOI
出版状态已出版 - 2011

关键词

  • earnings management
  • forced audit firm change
  • former audit partner

成果物的来源

  • ABDC-A*
  • Scopus
  • SSCI

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