Auditor Switching and Successor Auditor Conservatism
Auditors implement more conservative audit strategies for companies whose credibility of financial reports is in question.This paper examines whether Ruihua's successor auditors implemented a more conservative audit strategy for the former Ruihua clients after suffering from the failure of the audits of Kangdexin.We find that the successor auditors implemented more conservative audit strategies for the former Ruihua's clients.In addition,based on whether the clients follow the former Ruihua individual CPAs,we categorize the sample into"following"and"non-following"groups,and find that auditor conservatism is significantly higher for"non-following"clients,while auditor conservatism is not significantly different for"following"and successive clients.Further analysis documents that the conservatism of successor auditors to"non-following"clients is more pronounced in high-risk firms,complex-business firms,and small firms.Further analysis shows that non-following clients are audited for longer periods and pay lower audit fees than successive clients.This paper suggests that auditors tend to implement more robust audit strategies when they are aware of audit risks.
万方数据
维普
