Post-Enron Implicit Audit Reporting Standards: Sifting through the Evidence
Sercu, Piet Vander Bauwhede, Heidi Willekens, Marleen
Sercu, Piet
Vander Bauwhede, Heidi
Willekens, Marleen
Citations
Altmetric:
Publication Type
Journal article
Editor
Supervisor
Publication Year
2006
Journal
De Economist
Book
Publication Volume
154
Publication Issue
3
Publication Begin page
389
Publication End page
403
Publication NUmber of pages
Collections
Abstract
The accounting scandals and the demise of Andersen have increased auditors’ ex ante business risk. As a result, stock markets revised downward the value of the external audit (Callen and Morel (2002); Chaney and Philipich (2002); Krishnamurthy et al. (2002); Asthana et al. (2003)). One commonsensical reaction on behalf of auditors should have been to apply the existing rules more carefully and, thus, issue more non-clean opinions on the financial statements they have audited. This is exactly what we see. Closer scrutiny reveals that the higher incidence of non-clean audit opinions is not due to the (substantial) changes in the audit client list or their balance sheets. This study mirrors earlier results where auditors relaxed their standards following a drop in business risk (Geiger and Raghunandan, (2001), (2002); Francis and Krishnan, (2002)).
Research Projects
Organizational Units
Journal Issue
Keywords
Financial Accounting