Auditor-Client Disagreements, Auditor Resignations, And Audit Fees Charged By Successor Auditors

Dongliang Lei, Yu Zhou, Yakun Wang
2020 Journal of Applied Business Research  
This paper investigates the effects of auditor-client disagreement disclosure on auditor resignations and audit fee charged by successor auditors. Using a matched sample of auditor changes over the period 2003-2016, we find that auditor resignations are more often accompanied by auditor-client disagreements. We also find that Big 4 auditors are more likely to resign from their engagements when they disagree with their clients. Further, we document that successor auditors charge higher audit
more » ... for firms that have disagreements with their predecessor auditors. Relative to non-Big 4 auditors, Big 4 successor auditors charge even higher audit fee for disagreement firms.
doi:10.19030/jabr.v36i1.10321 fatcat:3vf6nlaegnb7bmrtaa2wujvfem