The Post‐SOX Evolution of the Client Portfolio of the Second Tier: A Focus on Restatement and Internal Control Risk

27 Pages Posted: 11 Oct 2012

See all articles by R. Mithu Dey

R. Mithu Dey

affiliation not provided to SSRN

Ashok Robin

Rochester Institute of Technology (RIT)

Date Written: November 2012

Abstract

The Post‐SOX era coincides with the rise of the Second Tier auditing firms. Our study tests risk characteristics of new (and departing) clients versus continuing clients of the Second Tier to judge overall risks faced by this auditing tier. We add to the prior literature by focusing on prevalence and severity of restatement and internal control weaknesses (ICW). We show that the new clients of the Second Tier indeed have higher prevalence and severity of restatements and ICW. Departing clients also show a high risk profile compared to continuing clients, but the difference is perhaps not as strong as that indicated in the new versus continuing comparison. We confirm the widely held belief that the Second Tier is gaining market share, but this gain appears to be achieved in a somewhat controlled manner.

Keywords: Audit market, auditor choice, internal control, public accounting firms, restatements

Suggested Citation

Dey, R. Mithu and Robin, Ashok, The Post‐SOX Evolution of the Client Portfolio of the Second Tier: A Focus on Restatement and Internal Control Risk (November 2012). International Journal of Auditing, Vol. 16, Issue 3, pp. 308-334, 2012, Available at SSRN: https://ssrn.com/abstract=2160156 or http://dx.doi.org/10.1111/j.1099-1123.2012.00454.x

R. Mithu Dey (Contact Author)

affiliation not provided to SSRN

No Address Available

Ashok Robin

Rochester Institute of Technology (RIT) ( email )

College of Business
Rochester, NY 14623
United States
585-475 5211 (Phone)

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
1
Abstract Views
1,050
PlumX Metrics