The Effect of Auditors Jumping Ship on Audit Quality
Date Issued
2015
Date
2015
Author(s)
Lin, Yi-Lin
Abstract
This paper discuss the issues of the effect of auditors jumping ship on the audit quality. The study is divided into four parts. The first part is that the audit quality difference between auditors who have jumped ship or not. The second part is that when the clients follow their jumping ship auditors, what the effect of accounting firm on audit quality is. The third part is that what are the reasons that make auditors decide to jump ship. The forth part is that what types of clients will follow auditors to jump ship. The samples of auditors jumping ship in this study are selected from 1983-2013. The empirical results of first part show that there is no significant difference on audit quality between auditors who have the record of jumping ship and who don’t. The empirical result of the second part shows that when the clients follow their jumping ship auditors to switch from small accounting firm to big or small accounting firm, the discretionary accrual becoming smaller significantly. The empirical results of the third part show that when the difference of average clients’ ROA ratio and auditors’ market share between auditors and their peers in the same accounting firm affect the auditors to jump ship. Empirical results of the last part show that when the client have greater assets and will not follow the jumping ship auditors to switch accounting firm. The clients have the higher ROA ratio will follow the jumping ship auditors to switch accounting firm.
Subjects
Jumping ship auditors
discretionary accrual
audit quality
accounting firm size
Type
thesis