Independent Auditor Switching And Changes In Corporate Bond Ratings

Abstract

The creditability that independent audits add to financial reporting is undermined when clients change their independent auditors.  Although the subject of numerous research studies there is a lack of definitive evidence concerning client motivation for switching independent auditors.  This effort opens a new avenue of study and investigates the possible relationship between independent auditor switching and changes in corporate bond ratings.  The findings suggest that clients are likely to experience decreasing bond ratings prior to and subsequent to switching independent auditors.