Download This PaperGoing-Concern Opinions in Failing Companies: Auditor Dependence and Opinion Shopping
26 Pages Posted: 12 Oct 2000
Date Written: August 2000
Abstract
Contrary to public expectations, companies usually receive clean audit opinions shortly prior to failure. This study examines whether audit reports in failing companies are affected by auditor dependence or opinion shopping. I find audit fees, auditor size, auditor-client tenures and dominant directors are not significantly associated with going-concern opinions. This suggests audit reports are not affected by auditor dependence. I also find companies strategically appoint auditors who are less likely to issue going concern opinions. This suggests failing companies successfully engage in opinion shopping.
JEL Classification: M49, G33
Suggested Citation: Suggested Citation
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