财务、会计seminar第一百四十四期讲座

演讲题目:  Auditor Response to Client Litigation Risk and the Impact on  Audit Quality

 

演  讲 者: Szu-fan Chen

           Assistant  Professor

       Hong Kong University of  Science and Technology

 

演讲时间:  2016年12月23日(周五)上午 10:00 -  11:30

 

演讲地点:嘉庚二205室

 

主  持 人:郑祯 助理教授

 

参  加 者:对会计、财务研究有兴趣的师生

 

讲座简介:Since auditors can increase fees to improve the audit process or  resign from engagements, they do not face the same litigation risks as their  clients. As in recent studies, we show that less than 20 percent of auditors are  named as defendants when their clients are involved in private securities class  action lawsuits. Most of the client characteristics that predict client risk  lose their explanatory power when they are used to predict audit risk. We then  show that the relationship between litigation risk and audit quality is  conditional on the strategies taken by auditors. Auditors who resign from an  engagement when faced with imminent client litigation provide lower-quality  audits than those who stay. Moreover, auditors who have resigned are succeeded  by auditors who provide audits of even lower quality and charge lower fees.  The fees of new auditors reflect a risk  premium, as they are positively related to auditor litigation but not to client  litigation. Auditors who stay charge higher fees, and the fees reflect more of  an audit effort than a risk premium, as they are negatively related to auditor  litigation. In summary, for clients who experience an auditor switch, the  litigation risk leads to lower audit quality. In contrast, audit quality  increases for clients whose auditors do not resign before the manipulation  period.