Opinion-Shopping: Firm versus Partner-Level Evidence

63 Pages Posted: 6 May 2016 Last revised: 1 Mar 2021

See all articles by Beatriz Garcia Osma

Beatriz Garcia Osma

Universidad Carlos III de Madrid - Department of Business Administration; European Corporate Governance Institute (ECGI)

Belen Gill-de-Albornoz

Jaume I University - Department of Finance and Accounting

Elena de las Heras

Universidad Autónoma de Madrid

Simona Rusanescu

University of Groningen

Date Written: February 26, 2021

Abstract

Employing Lennox’s (2000) methodology on a uniquely long time series of Spanish companies’ data, we find evidence of successful audit opinion-shopping through the firm switching decision. However, in contrast to Chen et al. (2016) in the Chinese setting, we find no evidence of successful opinion-shopping at the partner level. This supports the thesis that the audit market characteristics that are key to promote or deter opinion shopping might differ at the firm and partner level within a country, with consequences for audit quality. In addition, we provide evidence on the strategies that companies use to secure more favourable opinions. The results suggest that companies prefer to opinion shop at the partner level, which is consistent with the argument that the costs and benefits associated with opinion-shopping are different at these two levels, and lead to different outcomes.

Keywords: audit opinion-shopping; audit firm switches; audit partner switches; modified audit opinion

JEL Classification: M42, M48

Suggested Citation

Garcia Osma, Beatriz and Gill de Albornoz Noguer, Belen and de las Heras, Elena and Rusanescu, Simona, Opinion-Shopping: Firm versus Partner-Level Evidence (February 26, 2021). Available at SSRN: https://ssrn.com/abstract=2776609 or http://dx.doi.org/10.2139/ssrn.2776609

Beatriz Garcia Osma

Universidad Carlos III de Madrid - Department of Business Administration ( email )

Calle Madrid 126
Getafe, Madrid, Madrid 28903
Spain

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Belen Gill de Albornoz Noguer (Contact Author)

Jaume I University - Department of Finance and Accounting ( email )

Campus del Riu Sec
12081 Castello de la Plana
Spain

HOME PAGE: http://www.uji.es

Elena De las Heras

Universidad Autónoma de Madrid ( email )

Avda. Fco. Tomas y Valiente 5
Madrid, Madrid 28049
Spain

Simona Rusanescu

University of Groningen ( email )

P.O. Box 800
9700 AH Groningen, Groningen 9700 AV
Netherlands

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