Opinion-Shopping: Firm versus Partner-Level Evidence

58 Pages Posted: 6 May 2016 Last revised: 18 Jan 2019

See all articles by Beatriz Garcia Osma

Beatriz Garcia Osma

Universidad Carlos III de Madrid - Department of Business Administration

Belen Gill-de-Albornoz

Jaume I University - Department of Finance and Accounting; Universidad de Alicante - Valencian Institute of Economic Studies

Elena de las Heras

Universidad Autónoma de Madrid

Simona Rusanescu

University of Groningen

Date Written: January 17, 2019

Abstract

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

Garcia Osma, Beatriz and Gill de Albornoz Noguer, Belen and de las Heras, Elena and Rusanescu, Simona, Opinion-Shopping: Firm versus Partner-Level Evidence (January 17, 2019). Available at SSRN: https://ssrn.com/abstract=2776609 or http://dx.doi.org/10.2139/ssrn.2776609

Beatriz Garcia Osma

Universidad Carlos III de Madrid - Department of Business Administration ( email )

Calle Madrid 126
Getafe, Madrid, Madrid 28903
Spain

Belen Gill de Albornoz Noguer (Contact Author)

Jaume I University - Department of Finance and Accounting ( email )

Campus del Riu Sec
12081 Castello de la Plana
Spain

Universidad de Alicante - Valencian Institute of Economic Studies ( email )

sn 46022 E
Spain

Elena De las Heras

Universidad Autónoma de Madrid ( email )

Avda. Fco. Tomas y Valiente 5
Madrid, Madrid 28049
Spain

Simona Rusanescu

University of Groningen ( email )

P.O. Box 800
9700 AH Groningen, Groningen 9700 AV
Netherlands

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