Auditor Switches in the Post-SOX Era: The Case of Firms with Internal Control Weaknesses
Florida Atlantic University
Linda A. Hall
affiliation not provided to SSRN
December 1, 2009
Recent changes in the regulatory environment require that auditors express an opinion on the design and effectiveness of their clients’ internal controls. This shift likely impacted auditor-client relationships negatively, especially for firms that receive an adverse internal controls opinion. As a result, such firms may either switch or remain with their incumbent auditors. In this paper, we study the factors that affect this choice. We find that the severity of the internal control problems, the auditor-related fees, the length of auditor-client relationships and the presence of a Big 4 auditor affect the probability that a firm switches auditors. Further analyses examine the factors that affect auditor dismissals and resignations, as well as switches involving Big 4 auditors.
Number of Pages in PDF File: 35
Keywords: Auditor Switches, Internal Control, Material Weakness, Sarbanes-Oxley Act, Section 302 and 404working papers series
Date posted: May 8, 2010 ; Last revised: May 16, 2010
© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo3 in 0.641 seconds