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The riskiness of audit firm continuing clients' portfolio

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dc.contributor.author Khalil S.
dc.contributor.editor
dc.date 2011
dc.date.accessioned 2017-09-07T07:51:25Z
dc.date.available 2017-09-07T07:51:25Z
dc.date.issued 2011
dc.identifier 10.1108/02686901111124657
dc.identifier.isbn
dc.identifier.issn 02686902
dc.identifier.uri http://hdl.handle.net/10938/12142
dc.description.abstract Purpose: The purpose of this paper is to test whether firms audited by the same Big 4 audit firm (Big 4 continuing clients) are more-less likely to report material weaknesses (systemic material weaknesses) in internal controls over a financial reporting than those audited by the same Non-Big 4 audit firm (Non-Big 4 continuing clients) over the period 2005-2008. It also investigates whether the number of material weaknesses and that of systemic material weaknesses varies among the two groups. Design-methodology-approach: Logistic regression and count regression analysis for panel data tests the hypotheses using all firms that had SOX 404 filings and that were audited by the same auditor over the period 2005-2008 (1,668 firms; 6,672 firm-year observations). Findings: Findings document that Big 4 continuing clients are less likely to report material weaknesses and systemic material weaknesses than Non-Big 4 continuing clients, especially during the first two years of investigation. Results also demonstrate that the number of material weaknesses and that of systemic material weaknesses reported by Big 4 continuing clients is significantly lower than that reported by Non-Big 4 continuing clients, primarily for the years 2005 and 2006. Originality-value: Findings support the risk avoidance perspective where large audit firms avoid riskier clients due to potential litigation costs and-or due to potential sanctions by the Public Company Accounting Oversight Board (PCAOB). Results also suggest that smaller audit firms did not extensively test the quality of internal controls prior to the year 2004. They highlight that the enactment of SOX 404 and the establishment of the PCAOB heightened audit firms focus on internal controls and raised their sensitivity to audit risk arising from weaknesses in internal controls over financial reporting. © Emerald Group Publishing Limited.
dc.format.extent
dc.format.extent Pages: (335-349)
dc.language English
dc.relation.ispartof Publication Name: Managerial Auditing Journal; Publication Year: 2011; Volume: 26; no. 4; Pages: (335-349);
dc.relation.ispartofseries
dc.relation.uri
dc.source Scopus
dc.subject.other
dc.title The riskiness of audit firm continuing clients' portfolio
dc.type Article
dc.contributor.affiliation Khalil, S., American University of Beirut, Beirut, Lebanon
dc.contributor.authorAddress Khalil, S.; American University of Beirut, Beirut, Lebanon; email: sk61@aub.edu.lb
dc.contributor.authorCorporate University: American University of Beirut; Faculty: Suliman S. Olayan School of Business; Department: School of Business;
dc.contributor.authorDepartment School of Business
dc.contributor.authorDivision
dc.contributor.authorEmail
dc.contributor.authorFaculty Suliman S. Olayan School of Business
dc.contributor.authorInitials
dc.contributor.authorOrcidID
dc.contributor.authorReprintAddress
dc.contributor.authorResearcherID
dc.contributor.authorUniversity American University of Beirut
dc.description.cited
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dc.format.extentCount 15
dc.identifier.articleNo
dc.identifier.coden
dc.identifier.pubmedID
dc.identifier.scopusID 79954538811
dc.identifier.url
dc.publisher.address
dc.relation.ispartofConference
dc.relation.ispartofConferenceCode
dc.relation.ispartofConferenceDate
dc.relation.ispartofConferenceHosting
dc.relation.ispartofConferenceLoc
dc.relation.ispartofConferenceSponsor
dc.relation.ispartofConferenceTitle
dc.relation.ispartofFundingAgency
dc.relation.ispartOfISOAbbr
dc.relation.ispartOfIssue 4
dc.relation.ispartOfPart
dc.relation.ispartofPubTitle Managerial Auditing Journal
dc.relation.ispartofPubTitleAbbr Manage. Audit. J.
dc.relation.ispartOfSpecialIssue
dc.relation.ispartOfSuppl
dc.relation.ispartOfVolume 26
dc.source.ID
dc.type.publication Journal
dc.subject.otherAuthKeyword Auditors
dc.subject.otherAuthKeyword Corporate governance
dc.subject.otherAuthKeyword Financial reporting
dc.subject.otherAuthKeyword Internal control
dc.subject.otherAuthKeyword Portfolio investment
dc.subject.otherAuthKeyword Sarbanes-Oxley
dc.subject.otherChemCAS
dc.subject.otherIndex
dc.subject.otherKeywordPlus
dc.subject.otherWOS


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