The Association between Auditor Switching and Audit Opinion in the Republic of Serbia

Abstract

In this study, the authors examine the association between auditor switching and type of audit opinion on a sample of companies in the Republic of Serbia. The sample comprised 4,309 non-financial companies for which auditor’s reports were publicly available for the period 2010-2013. The results show that auditor switching was linked to an increased likelihood of change in the type of audit opinion. In the case when the initial audit opinion was unqualified or qualified, this increase was statistically significant. Such findings can indicate that auditor switching may lead to an improved informative value of auditor’s reports, but it also raises concerns about the possibility of opinion shopping.

Keywords: Auditor independence, Auditor switching, Audit opinion

JEL Classification: M49, C12