Do Auditors Value Client Conservatism?

• Main Authors: ZANG, Yoonseok, LIM, Chee Yeow, DeFond, Mark
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2011
• Subjects: accounting conservatism; litigation risk; auditor reputation; audit pricing; audit opinion; auditor resignation; financial restatements; Accounting; Business Law, Public Responsibility, and Ethics; Corporate Finance
• Online Access: https://ink.library.smu.edu.sg/soa_research/853; http://leeds-faculty.colorado.edu/zeyun/workshop11-12_files/DLZ%20Jan%2018%202012.pdf
• Institution: Singapore Management University

Auditors risk losing reputation capital when they are suspected of allowing substandard financial reporting, and prior research argues that accounting conservatism acts as a governance mechanism that reduces substandard reporting. Thus, we predict that conservative clients impose lower reputation...