A note on audit qualifications and switches: some further evidence from a small sample study

This study examines the audit switching behavior of Hong Kong companies between 1981 and 1988. It finds that audit switching is positively associated with audit qualifications, but that switching behavior is not likely to produce unqualified audit reports. The incidence of qualifications is also associated with the size of the audit firms and the size of the audited (auditee) firm. Small audit firms issue more qualified reports than large audit firms, and large companies (auditees) receive fewer qualified reports than small companies. Large companies are also less likely to switch auditors after receiving qualified reports.