Accounting misstatements following lawsuits against auditors
نویسندگان
چکیده
This study investigates whether an auditor's experience of litigation in the recent past affects subsequent financial reporting quality. At the audit firm level, we find accounting misstatements occur significantly less (more) often after audit firms are sued (not sued). At the audit office level, the negative association between past litigation and future misstatements is stronger for offices who were directly implicated in the litigation than for the non-accused offices of sued audit firms. Therefore, the litigation experiences of both audit firms and audit offices are incrementally significant predictors of future financial reporting quality. & 2013 Elsevier B.V. All rights reserved.
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We wish to thank the management of the restaurant company for allowing the use of their corporate data in the case study and the simulations. In accordance with their requests we have not shown the actual years that the data relates to and we have approximated some of the descriptive statistics. We also wish to thank the AJPT reviewers and the editor, Dan Simunic, for their excellent comments. ...
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