Stealth Opinion Shopping? Evidence from Switching of Signing Audit Partners among Chinese Firms

• In Event: Auditing in China

Abstract

This study investigates whether Chinese public firms engage in opinion shopping by switching their audit partners. Compared to an outright switch of audit firms, client companies may simply switch their audit partners but choose to stay with the same audit firm. In the setting of Chinese institutional environment, we provide evidence confirming that client companies achieve opinion shopping through audit partner switches. We also find that opinion shopping at the audit partner level is positively associated with the regulation intensity and the client importance, but negatively associated with audit firm size. In addition, we show that the engagement partners (who are typically junior partners) rather than review partners (who are typically senior partners) are more likely to be replaced. Consistent with opinion shopping, we further find that conservative audit partners are more likely to be replaced by less conservative audit partners

Authors

• Feng Chen, University of Toronto

• Songlan Peng, York University

• Shuang Xue, Shanghai University of Finance and Economics

• Zhifeng Yang, City University of Hong Kong

• Feiteng Ye, Shanghai Lixin University of Commerce