An Empirical Study on Auditor Switch, Abnormal Audit Fees and Accounting Information Transparency

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Journal of Central University of Finance & Economics ›› 2016, Vol. 0 ›› Issue (10) : 60-69.

LI Xiao-hui, YANG Kun

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Abstract

Based on the sample of Chinese A-share listed companies from 2009-2014, the paper tests the effect of auditor switch and abnormal audit fees on accounting information transparency. Results show that accounting information transparency would be lower if a company has been issued an abnormal audit opinion in the previous period and this company is about to undergo an auditor switch. Auditor switches between firms in the same tier better conveys negative accounting information and serve as a more effective warning sign. If a company has been issued an abnormal audit opinion in the previous period and also has abnormally high audit fees, accounting information transparency will be lower. Negatively abnormal audit fees does not appear to lower accounting information transparency by its reflecting stronger client bargaining power. The research in the paper extends the literatures in the field of audit collusion,provides empirical evidence for strengthening the regulation warning messages for the interpretation of abnormal behaviors in companies by inventors.

Key words

Auditor switches / Abnormal audit fees / Accounting information transparency / Auditing collusion

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LI Xiao-hui, YANG Kun. An Empirical Study on Auditor Switch, Abnormal Audit Fees and Accounting Information Transparency[J]. Journal of Central University of Finance & Economics, 2016, 0(10): 60-69

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