The consequences of protecting audit partners’ personal assets from the threat of liability
This study investigates the audit firm’s decision to protect its partners’ personal assets by becoming a limited liability partnership (LLP). We find that the likelihood of an audit firm switching from unlimited to limited liability is increasing in its size and exposure to litigation risk. We find...
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sg-ntu-dr.10356-1032512023-05-19T06:44:40Z The consequences of protecting audit partners’ personal assets from the threat of liability Lennox, Clive S. Li, Bing Nanyang Business School This study investigates the audit firm’s decision to protect its partners’ personal assets by becoming a limited liability partnership (LLP). We find that the likelihood of an audit firm switching from unlimited to limited liability is increasing in its size and exposure to litigation risk. We find no evidence that audit firms supply lower audit quality, lose market share, or charge lower audit fees after they become LLPs. However, the mix of public and private clients in audit firms’ portfolios exhibits a significant shift toward riskier publicly traded companies after the switch to limited liability. 2013-10-25T02:49:05Z 2019-12-06T21:08:23Z 2013-10-25T02:49:05Z 2019-12-06T21:08:23Z 2012 2012 Journal Article Lennox, C. S., & Li, B. (2012). The consequences of protecting audit partners’ personal assets from the threat of liability. Journal of Accounting and Economics, 54(2-3), 154-173. 0165-4101 https://hdl.handle.net/10356/103251 http://hdl.handle.net/10220/16890 10.1016/j.jacceco.2012.06.002 en Journal of accounting and economics |
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This study investigates the audit firm’s decision to protect its partners’ personal assets by becoming a limited liability partnership (LLP). We find that the likelihood of an audit firm switching from unlimited to limited liability is increasing in its size and exposure to litigation risk. We find no evidence that audit firms supply lower audit quality, lose market share, or charge lower audit fees after they become LLPs. However, the mix of public and private clients in audit firms’ portfolios exhibits a significant shift toward riskier publicly traded companies after the switch to limited liability. |
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Nanyang Business School |
| author_facet |
Nanyang Business School Lennox, Clive S. Li, Bing |
| format |
Article |
| author |
Lennox, Clive S. Li, Bing |
| spellingShingle |
Lennox, Clive S. Li, Bing The consequences of protecting audit partners’ personal assets from the threat of liability |
| author_sort |
Lennox, Clive S. |
| title |
The consequences of protecting audit partners’ personal assets from the threat of liability |
| title_short |
The consequences of protecting audit partners’ personal assets from the threat of liability |
| title_full |
The consequences of protecting audit partners’ personal assets from the threat of liability |
| title_fullStr |
The consequences of protecting audit partners’ personal assets from the threat of liability |
| title_full_unstemmed |
The consequences of protecting audit partners’ personal assets from the threat of liability |
| title_sort |
consequences of protecting audit partners’ personal assets from the threat of liability |
| publishDate |
2013 |
| url |
https://hdl.handle.net/10356/103251 http://hdl.handle.net/10220/16890 |
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1770564061010853888 |