After enron: Auditor conservatism and ex-Andersen clients

被引:129
作者
Cahan, SF [1 ]
Zhang, W
机构
[1] Univ Auckland, Auckland 1, New Zealand
[2] Clarkson Univ, Potsdam, NY 13676 USA
关键词
auditor conservatism; litigation risk; abnormal accruals; Arthur Andersen;
D O I
10.2308/accr.2006.81.1.49
中图分类号
F8 [财政、金融];
学科分类号
0202 ;
摘要
This study examines whether after Arthur Andersen's demise, successor auditors required more conservative accounting for their ex-Andersen clients in order to minimize litigation risk. We use unadjusted and performance-adjusted measures of abnormal accruals, and we examine the level of and changes in the abnormal accruals of ex-Andersen clients in 2002 relative to a control sample of clients that were audited by a Big 4 auditor in 2001 and 2002. We conduct univariate and multivariate tests. In our multivariate tests, we control for other factors that may affect litigation risk cross-sectionally. Our results indicate that the ex-Andersen clients had lower levels of and larger decreases in abnormal accruals in 2002. This is consistent with auditor conservatism and suggests the successor auditors viewed an Andersen audit as a unique source of litigation risk.
引用
收藏
页码:49 / 82
页数:34
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