Opinion-Shopping: Firm versus Partner-Level Evidence
58 Pages Posted: 6 May 2016 Last revised: 18 Jan 2019
Date Written: January 17, 2019
We provide evidence on the strategies, timing and relative outcomes obtained by companies that attempt to shop for favourable audit opinions. Employing Lennox’s (2000) methodology on a uniquely long time series of Spanish companies’ data, we find evidence of successful opinion-shopping through firm switching. However, we find no evidence of successful opinion-shopping at the partner level. Our results also suggest that companies first attempt to opinion-shop at the partner level, consistent with the argument that the costs and benefits associated with these opinion-shopping strategies are different, and lead to different outcomes.
Keywords: opinion-shopping; audit firm switches; audit partner switches; modified audit opinion
JEL Classification: M42, M48
Suggested Citation: Suggested Citation