Dissertation
Auditor changes by the firms just missing analysts' forecasts
Doctor of Philosophy (Ph.D.), Drexel University
Mar 2018
DOI:
https://doi.org/10.17918/D8SS9W
Abstract
This study explores a unique setting to examine whether firms tend to change their auditors when their annually reported EPS "just misses" the most recent consensus analysts' forecasts (i.e., within one cent). I find that firms just missing the consensus analysts' forecasts are more likely to switch their auditors than their peer firms. Furthermore, these just-missing firms tend to switch to a more flexible auditor and have lower earnings quality than their peer firms after making the auditor switch, suggesting some opportunism in their switching behavior. In contrast with most opinion shopping literature, this "just-miss" setting allows me to test an implicit form of opportunistic auditor switching behavior - the shopping of auditors' styles rather than their opinions. The results taken together indicate that firms can successfully shop for a more lenient auditor when the incumbent possibly constrains their ability to meet or beat the earnings target. This also provides empirical evidence in support of DeFond and Zhang (2014)'s argument that opinion shopping may occur in forms other than the reduction of going-concern opinions and still reflect an impairment of auditor independence/quality.
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Details
- Title
- Auditor changes by the firms just missing analysts' forecasts
- Creators
- Yaou Zhou - DU
- Contributors
- Hsihui Chang (Advisor) - Drexel University (1970-)Anthony Paul Curatola (Advisor) - Drexel University (1970-)
- Awarding Institution
- Drexel University
- Degree Awarded
- Doctor of Philosophy (Ph.D.)
- Publisher
- Drexel University; Philadelphia, Pennsylvania
- Number of pages
- vii, 78 pages
- Resource Type
- Dissertation
- Language
- English
- Academic Unit
- Accounting; Bennett S. LeBow College of Business; Drexel University
- Other Identifier
- 7899; 991014632592704721