AUDITOR RESIGNATIONS, LITIGATION RISK AND LITIGATION EXPERIENCE

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Advances in Financial Economics

ISSN: 1569-3732
Series editor(s): Professor Kose John, Professor Anil Makhija, Professor Stephen P. Ferris

Subject Area: Economics

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Document Information:
Title:	AUDITOR RESIGNATIONS, LITIGATION RISK AND LITIGATION EXPERIENCE
Author(s):	Susan Scholz
Volume:	8 ISBN: 978-0-76231-027-2 eISBN: 978-1-84950-214-6
Citation:	Susan Scholz (2003), AUDITOR RESIGNATIONS, LITIGATION RISK AND LITIGATION EXPERIENCE, in (ed.) 8 (Advances in Financial Economics, Volume 8), Emerald Group Publishing Limited, pp.173-193
DOI:	10.1016/S1569-3732(03)08008-3 (Permanent URL)
Publisher:	Emerald Group Publishing Limited
Article type:	Chapter Item
Abstract:	Accounting firms claim that the risk of costly litigation leads to resignations from high-risk clients, and that these resignations represent an economic inefficiency. This study examines the association between resignations, dismissals and litigation in the computer industry from 1988–1995. Resignations and dismissals appear to be similar, suggesting some dismissals are implicit resignations. Results support a relationship between risk and resignations. Since some characteristics of auditor litigation risk are also characteristic of unprofitable audit engagements, the analysis incorporates the actual litigation experience of sample companies to provide insights into claims of inefficiencies surrounding the switches.