Do audit clients successfully engage in opinion shopping? Partner-level evidence

Chen, Feng, Peng, Songlan, Xue, Shuang, Yang, Zhifeng and Ye, Feiteng 2016, Do audit clients successfully engage in opinion shopping? Partner-level evidence, Journal of accounting research, vol. 54, no. 1, pp. 79-112, doi: 10.1111/1475-679X.12097.

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Title Do audit clients successfully engage in opinion shopping? Partner-level evidence
Author(s) Chen, Feng
Peng, Songlan
Xue, Shuang
Yang, ZhifengORCID iD for Yang, Zhifeng
Ye, Feiteng
Journal name Journal of accounting research
Volume number 54
Issue number 1
Start page 79
End page 112
Total pages 34
Publisher Wiley-Blackwell
Place of publication London, Eng.
Publication date 2016-03
ISSN 0021-8456
Keyword(s) opinion shopping
partner switch
audit quality
individual auditor
Summary This study investigates whether companies engage in audit opinion shopping activities by exerting influence over an audit firm's decision to switch the engagement partner ("partner-level opinion shopping") in the Chinese setting, where the identities of engagement partners are publicly disclosed. Adopting the empirical framework developed by Lennox [2000], we show evidence that companies successfully engage in partner-level opinion shopping. Further, partner-level opinion shopping is more likely to be successful if a company is economically important to an audit firm, and it is less likely to be successful if the audit firm is formed as a partnership rather than a corporation. We also find that companies successfully engaging in partner-level opinion shopping exhibit significantly lower earnings quality. Finally, we directly compare audit records between incoming and outgoing partners and find that, for companies that successfully improve audit opinions after partner switching, incoming partners have a significantly higher propensity to issue clean opinions than their outgoing counterparts.
Language eng
DOI 10.1111/1475-679X.12097
Field of Research 150102 Auditing and Accountability
1501 Accounting, Auditing And Accountability
Socio Economic Objective 910499 Management and Productivity not elsewhere classified
HERDC Research category C1.1 Refereed article in a scholarly journal
ERA Research output type C Journal article
Copyright notice ©2015, University of Chicago on behalf of the Accounting Research Center
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Document type: Journal Article
Collections: Faculty of Business and Law
Department of Accounting
2018 ERA Submission
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