Did PwC Lose Reputation Post Audit Failure at Satyam Computer Services? Evidence from the Indian Audit Market

International Journal of Accounting and Finance (IJAF), Vol. 5, No. 1, 2015

Posted: 26 Feb 2018

See all articles by Partha S. Mohapatra

Partha S. Mohapatra

California State University, Sacramento - Department of Accounting

Anup Nandialath

University of Wisconsin - La Crosse - Department of Management

Allan Graham

American University of Sharjah

Date Written: August 1, 2015

Abstract

Safeguarding reputation is one major incentive for large auditors to maintain high audit quality. We investigate the phenomenon of reputation by studying the impact of an audit failure on the reputation of a large audit firm in India. Specifically, we analyze the events surrounding the high profile audit failure of Satyam Computer Services and its resultant impact on the audit practice of Price Waterhouse Coopers (PwC) and its affiliates in India. The results of our analysis indicate that following the audit failure there was a high propensity for clients of PwC firms to switch to other firms. We interpret this behavior as indicative of a loss of reputation for PwC due to the Satyam audit failure.

Keywords: reputation effect, Big 4, audit quality

Suggested Citation

Mohapatra, Partha S. and Nandialath, Anup and Graham, Allan, Did PwC Lose Reputation Post Audit Failure at Satyam Computer Services? Evidence from the Indian Audit Market (August 1, 2015). International Journal of Accounting and Finance (IJAF), Vol. 5, No. 1, 2015, Available at SSRN: https://ssrn.com/abstract=3119186

Partha S. Mohapatra (Contact Author)

California State University, Sacramento - Department of Accounting ( email )

United States

Anup Nandialath

University of Wisconsin - La Crosse - Department of Management ( email )

1725 State St
La Crosse, WI 54601
United States

Allan Graham

American University of Sharjah ( email )

P.O. Box 26666
Sharjah
United Arab Emirates

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