Auditors’ reporting conservatism after regulatory sanctions : Evidence from china
Research output: Journal Publications and Reviews (RGC: 21, 22, 62) › 21_Publication in refereed journal › peer-review
Author(s)
Related Research Unit(s)
Detail(s)
| Original language | English |
|---|---|
| Pages (from-to) | 1-24 |
| Journal / Publication | Journal of International Accounting Research |
| Volume | 13 |
| Issue number | 2 |
| Online published | Jan 2014 |
| Publication status | Published - 2014 |
Link(s)
Abstract
This study examines whether regulatory sanctions have a disciplinary effect on auditors in a large emerging market. Based on the enforcement releases issued by the China Securities Regulatory Commission (CSRC) during 1996–2007, we hypothesize and find that auditors who are sanctioned for failure to detect and report financial statement fraud report more conservatively after the sanction. Our empirical findings specifically suggest that sanctioned auditors issue more going-concern opinions for risky clients after enforcement action than they did before the enforcement action. In contrast, we find no such effect for non-risky clients. Overall, we provide evidence that regulatory sanctions are effective in shaping auditors’ behavior when they audit risky clients.
Research Area(s)
- Audit risk, Auditors’ reporting conservatism, Going-concern opinions, Modified audit opinions, Regulatory sanctions
Citation Format(s)
Auditors’ reporting conservatism after regulatory sanctions: Evidence from china. / Firth, Michael A.; Lan Mo, Phyllis Lai; Wong, Raymond M. K.
In: Journal of International Accounting Research, Vol. 13, No. 2, 2014, p. 1-24.
In: Journal of International Accounting Research, Vol. 13, No. 2, 2014, p. 1-24.
Research output: Journal Publications and Reviews (RGC: 21, 22, 62) › 21_Publication in refereed journal › peer-review
