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Determinants of Client-Initiated and Auditor-Initiated Auditor Changes
Thomas G Calderon,
The University of Akron
Emeka O Ofobike, The University of Akron
ABSTRACT. Auditor changes may be initiated by either the client or the auditor. Our research supports the view that client-initiated and auditor-initiated separations are driven by different interests. A client-initiated separation would be the client’s response to perceived deficiencies and imperfections in the alliance. Issues of concern to the auditor, which lead to auditor-initiated separations, include internal controls, risk management, scope limitations, and the proportion of audit fees to total fees. These issues negatively affect the alliance between auditors and their clients and evidently lead to separations. Although it is known that the market responds differently to auditor-initiated and client-initiated changes, the current literature lumps the two sets of decisions together and conducts research as though they were the same. Our study suggests that this approach to studying auditor changes clouds researchers’ understanding of the underlying factors that drive auditor changes.
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