Market reactions to auditor switches under regulatory consent and market driven regimes

2018 ◽  
Vol 14 (2) ◽  
pp. 197-215 ◽  
Author(s):  
Andrew Ferguson ◽  
Peter Lam ◽  
Nelson Ma
2007 ◽  
Vol 26 (1) ◽  
pp. 19-45 ◽  
Author(s):  
W. Robert Knechel ◽  
Vic Naiker ◽  
Gail Pacheco

Numerous capital market studies have investigated the stock market's reaction to firms switching to and from brand name auditors (Big 8/6/5/4 auditors). However, audit firm brand name is only one possible indication of the quality of an auditor. This study contributes to the existing literature on auditor switching, by examining how the market reacts to auditor switches to or from audit firms that are considered to be industry specialists. Consistent with our hypotheses, we find that firms switching between Big 4 auditors experience significant positive abnormal returns when the successor auditor is an industry specialist, and they experience significant negative abnormal returns when the successor auditor is not a specialist. We also find that these market reactions are more likely to be due to changes in perceived audit quality rather than differential costs of using specialist auditors. In supplemental analysis of switches involving non-Big 4 auditors, we find that firms that switch from a specialist Big 4 auditor to a non-Big 4 auditor suffer the largest negative market reaction. Surprisingly, we also observe that the market reacts most positively when a company switches from a non-Big 4 auditor to a Big 4 auditor who is not a specialist. These results suggest that the market does perceive audit quality differences based on industry specialization to be relevant to the valuation of a company's market value.


1993 ◽  
Vol 48 (3) ◽  
pp. 270-276 ◽  
Author(s):  
Jeff Bingaman ◽  
Robert G. Frank ◽  
Carrie L. Billy

2021 ◽  
Vol 9 (1) ◽  
Author(s):  
Faridatus Saidah ◽  
Yuliani Dwi Lestari

This study examines critical factors in affecting halal business management, particularly challenges in Halal logistics implementation faced by the logistics service provider as well as its potential and opportunities for Halal based business in Indonesia. An In-depth, semi-structured interview is conducted to deepen the understanding and to provide detailed data of the study. The study found that there are several factors influencing halal logistics implementation. In terms of business strategy, there are external and internal factors that affect halal logistics practices. Such as market-driven, perception benefit of halal logistic certification followed by customer loyalty, challenges in implementing halal logistics, the complexity of operation halal logistics, and invariably regulation factors. All of those factors have become a prior factor in implementing halal logistics practices. The findings can provide a guideline in how to implement halal logistics practices in logistic service provider business, especially in transportation and warehousing process, along with the expected result for its business performance.


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