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Wealth effect of auditor switch during crisis and non-crisis period : the Malaysian experience

Ismail, Shahazaz, Nasir, Annuar M. D., Ali Ahmed, Huson Joher and Hamid, Mohamad Ali Abdul 2006, Wealth effect of auditor switch during crisis and non-crisis period : the Malaysian experience, European journal of social science, vol. 3, no. 2, pp. 124-134.

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Title Wealth effect of auditor switch during crisis and non-crisis period : the Malaysian experience
Author(s) Ismail, Shahazaz
Nasir, Annuar M. D.
Ali Ahmed, Huson Joher
Hamid, Mohamad Ali Abdul
Journal name European journal of social science
Volume number 3
Issue number 2
Start page 124
End page 134
Publisher European Journals, Inc.
Place of publication [London, England]
Publication date 2006-02
ISSN 1450-2267
Keyword(s) wealth effect
auditor switch
economic crisis
second board firms
Summary This study examines the auditor switch effect on share prices among listed companies in Malaysia, mainly the Second Board companies during economic crisis and the economic growth period. Data on companies listed on the KLSE that reported switching of auditors were gathered from the respective companies’ annual reports for the period of 1990 until 1999. Daily stock prices and the Second Board Index for an interval of 200 days windows were extracted from the KLSE Daily Dairy. The wealth effect of auditor’s switch was investigated using the market model event study methodology. The general findings of the study imply that it is consistent with the theory, the market reacts positively to news involving switching to higher prestige audit firms before the economic crisis but reacted negatively during the economic crisis. News involving switching to lower prestige auditors received negative reaction both before and during the crisis. This study postulate that the negative reaction to switches during the economic crisis (either to higher prestige or to lower prestige auditors) may be due to cost cutting exercise rather than obtaining qualified audit reports.
Notes This article is located on the 130th page in the attached link.
Language eng
Field of Research 140207 Financial Economics
Socio Economic Objective 910206 Market-Based Mechanisms
HERDC Research category C1.1 Refereed article in a scholarly journal
Persistent URL http://hdl.handle.net/10536/DRO/DU:30023743

Document type: Journal Article
Collections: Faculty of Business and Law
School of Accounting, Economics and Finance
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Created: Wed, 17 Feb 2010, 11:01:13 EST by Huson Ali Ahmed