Client-firm market reaction to regulatory action against a major accounting firm
This study assesses the audit client firm share price reactions to a disclosure that the California State Board of Accountancy considered revoking Ernst & Young's (E&Y) license to practice in California due to alleged gross negligence in the Lincoln Savings and Loan fraud scandal. The insurance hypothesis and/or the audit quality explanation justify the expectation of significant client-firm share price reactions. We find limited empirical support that the disclosure of the revocation event is associated with negative market responses for E&Y’s clients. Results also indicate that auditor-supplied insurance and audit quality are more important for client firms experiencing financial distress, higher growth rates, and higher return variability. Copyright Springer 2003
Year of publication: |
2003
|
---|---|
Authors: | Pacini, Carl ; Hillison, William |
Published in: |
Journal of Economics and Finance. - Springer, ISSN 1055-0925. - Vol. 27.2003, 3, p. 279-299
|
Publisher: |
Springer |
Saved in:
Online Resource
Saved in favorites
Similar items by person
-
Board size and firm performance in the property-liability insurance industry
Pacini, Carl, (2008)
-
Pacini, Carl, (2007)
-
No news is bad news : market reaction to reason given for late filing of Form 10-K
Dee, Carol Callaway, (2010)
- More ...