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The Effect of Dismissal Threat on Auditor Independence
Dismissal threat;Auditor switch;Audit opinion;Auditor independence
|Issue Date: ||2013-07-15T04:05:40Z
|Publisher: ||國立政治大學會計學系; 中華會計教育學會|
This study investigates whether dismissal threat imposed by clients jeopardizes auditor independence, where auditor independence is surrogated by auditor's propensity to issue nonstandard audit opinions, and the determinants of dismissal threat. We use an auditor switch model to predict the unobserved switches clients would have made had they received opposite audit opinions and we test their effect on audit opinions. We classify a nonstandard audit opinion as referring (1) other auditor and (2) going concern problems. The results show that there is a significantly negative association between nonstandard audit opinion and dismissal threat by clients unwilling to receive an audit opinion modified for referring other auditor. This implies auditor independence would be impaired by dismissal threat about other auditor. Furthermore, the results of the determinants of dismissal threat show that auditor independence would be more severely impaired in the early years of auditor tenure. On the other hand, there is a significantly positive association between nonstandard audit opinion and dismissal threat by clients unwilling to receive an audit opinion modified for going concern problems. This implies auditor independence does not affected by dismissal threat about going concern. Furthermore, the success probability of dismissal threat about going concern would be increased by large clients and decreased by industry specialist. The difference between these two inappropriate audit opinions depends on legal liability. Hence, market-based incentives, such as loss of reputation and litigation costs, are essential to auditor independence.
|Relation: ||2004 第十三屆會計理論與實務研討會|
|Appears in Collections:||[會計學系] 會議論文|
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