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An Analysis of Auditor Litigation and Audit Service Quality.
Abstract
Abstract ABSTRACT: This study compares litigation activities of independent auditors to assess litigation as a means for making quality distinctions among auditors. The study provides a framework suggesting auditors With relatively low (high) litigation activity represent higher (lower) quality suppliers. The empirical analysis examines a sample of legal cases (n =472) and resolutions for these cases (if available, n = 183). The cases involve audit-related litigation against both Big Eight and large non-Big Eight firms during 1960-1985. The results indicate that nonBig Eight firms as a group have higher litigation activity than Big Eight firms. This result is consistent with existing research supporting the Big Eight as quality-differentiated auditors. Comparisons among Big Eight firms reveal some significant differences. However, identification of particular Big Eight firms as low (high) litigation activity auditors appears sensitive to the type of analysis.
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Citations
Cited by
A review of archival auditing research
DeFond, M., & Zhang, J. (2014) · Journal of Accounting and Economics · doi:10.1016/j.jacceco.2014.09.002 · Cited by 3,188
The role of information and financial reporting in corporate governance and debt contracting
Armstrong, C. S., Guay, W. R., & Weber, J. P. (2010) · Journal of Accounting and Economics · doi:10.1016/j.jacceco.2010.10.001 · Cited by 1,494
Auditor Reputation and the Pricing of Initial Public Offerings.
Beatty, R. P. (1989) · The Accounting Review · doi:10.2308/tar-4478058 · Cited by 634
Litigation risk and audit fees: evidence from UK firms cross-listed on US markets
Seetharaman, A., Gul, F. A., & Lynn, S. G. (2002) · Journal of Accounting and Economics · doi:10.1016/s0165-4101(01)00046-5 · Cited by 538
Earnings management, surplus free cash flow, and external monitoring
Chung, R., Firth, M., & Kim, J.-B. (2005) · Journal of Business Research · doi:10.1016/j.jbusres.2003.12.002 · Cited by 386
Metadata
- Authors
- Palmrose, Z.
- Venue
- The Accounting Review
- Publisher
- American Accounting Association
- Published
- 1988-01-01
- Volume
- 63
- Issue
- 1
- Pages
- 55-73
- ISSN
- 0001-4826 (ISSN-L)
- OpenAlex
- W46611208
- Cited by
- 638
- References
- 0
- FWCI
- 10.02
- Type
- journal article
- Language
- en
- Open access
- closed
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Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.
