Demand for Audit Quality: The Case of Laventhol and Horwath’s Auditees

Research output: Contribution to journalReview article

34 Scopus citations

Abstract

This study investigates the demand for audit quality for the firms being audited by Laventhol and Horwath (LH) at the time LH declared bankruptcy. The demand for audit quality by the former LH clients is inferred from their decisions to select Big Six or non–Big Six auditors. Because the change in auditors was involuntary, the sample avoids self-selection issues associated with voluntary auditor switches. LH clients that selected Big Six auditors tended to be more highly leveraged, have less management ownership, and issue more securities in the year after selecting the new auditor than LH clients that selected non–Big Six auditors.

Original languageEnglish (US)
Pages (from-to)183-198
Number of pages16
JournalJournal of Accounting, Auditing & Finance
Volume15
Issue number2
DOIs
StatePublished - 2000

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics, Econometrics and Finance (miscellaneous)

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