Client conservatism and auditor-client contracting

• Main Authors: DEFOND, Mark L., LIM, Chee Yeow, ZANG, Yoonseok
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2016
• Subjects: Conservatism; audit fee; going concern audit opinion; auditor resignation; litigation risk; misstatement risk; Accounting; Corporate Finance
• Online Access: https://ink.library.smu.edu.sg/soa_research/1562; https://ink.library.smu.edu.sg/context/soa_research/article/2589/viewcontent/client_conservatism__1_.pdf
• Institution: Singapore Management University

We find that auditors of more conservative clients charge lower fees, issue fewer going concern opinions, and resign less frequently, consistent with more conservative clients imposing less engagement risk on their auditors. Using path analysis, we find evidence that both inherent risk and auditor b...