Audit Firm Attributes and Auditor Litigation Risk
- 주제(키워드) Auditor expertise , Auditor independence , Auditor's litigation risk , Professional liability insurance premiums
- 주제(기타) Business, Finance
- 설명문(일반) [Kang, Minjung] Incheon Natl Univ, Coll Business, Incheon, South Korea; [Lee, Ho-Young] Yonsei Univ, Sch Business, Seoul, South Korea; [Mande, Vivek] Calif State Univ Fullerton, Mihaylo Coll Business & Econ, Fullerton, CA 92634 USA; [Woo, Yong-Sang] Ewha Womans Univ, Sch Business, Seoul, South Korea
- 등재 SSCI, SCOPUS
- 발행기관 WILEY
- 발행년도 2019
- 총서유형 Journal
- URI http://www.dcollection.net/handler/ewha/000000168623
- 본문언어 영어
- Published As https://dx.doi.org/10.1111/abac.12171
초록/요약
This study examines the association between auditors' litigation risk and audit firm attributes. Using professional liability insurance premiums as a proxy for auditors' litigation risk, we present evidence that the risk is lower in audit firms having: (1) separate non-audit and audit divisions; (2) a higher proportion of partners; and (3) a higher annual growth in number of CPAs employed. Additionally, we find that the risk is higher in audit firms having: (1) operating losses; and (2) high revenue growth. Our results are consistent with the idea that audit firms' financial condition and organizational structure affect their independence/ expertise, and, in turn, their litigation risk. Our results are broadly supportive of the PCAOB's (2015) and US Department of Treasury's (2008) views that investors, audit committees, management, and other regulators could benefit from having access to financial and organizational information about audit firms.
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