Auditor-Client Disagreements, Auditor Resignations, And Audit Fees Charged By Successor Auditors

Main Article Content

Dongliang Lei
Yu Zhou
Yakun Wang

Keywords

Auditor-Client Disagreement, Audit Resignation, Audit Fee

Abstract

This paper investigates the effects of auditor-client disagreement disclosure on auditor resignations and audit fee charged by successor auditors. Using a matched sample of auditor changes over the period 2003-2016, we find that auditor resignations are more often accompanied by auditor-client disagreements. We also find that Big 4 auditors are more likely to resign from their engagements when they disagree with their clients. Further, we document that successor auditors charge higher audit fees for firms that have disagreements with their predecessor auditors. Relative to non-Big 4 auditors, Big 4 successor auditors charge even higher audit fee for disagreement firms.

Downloads

Download data is not yet available.
Abstract 311 | PDF Downloads 388