Opinion-shopping: firm versus partner-level evidence

Abstract

Employing Lennox's (2000) methodology on a uniquely long time series of Spanish companies' data, we find evidence of successful audit opinion-shopping through the firm switching decision. However, in contrast to Chen et al. (2016) in the Chinese setting, we find no evidence of successful opinion-shopping at the partner level. This supports the thesis that the audit market characteristics that are key to promote or deter opinion shopping might differ at the firm and partner level within a country, with consequences for audit quality. In addition, we provide evidence on the strategies that companies use to secure more favourable opinions. The results suggest that companies may prefer to opinion shop at the partner level, which is consistent with the argument that the costs and benefits associated with opinion-shopping are different at these two levels, and lead to different outcomes.

The Impact of the Characteristics of the Board of Directors on Auditor's opinion Shopping: Evidence from Egypt

“…The study of Osma et al (2022) Title: Opinion-shopping: Partner versus firm-level evidence. The main objective of this study is to identify the extent of opinion shopping at partner-level and at audit firm-level in Spain.…”

“…The Securities Exchange Commission defined opinion shopping as searching for an auditor willing to support some type of accounting treatment that would assist the company in achieving the report's informational objectives, even if it would reduce the financial statements reliability (Lee, 2016). Osma et al (2022) explained that the auditor's opinion shopping occurs when the audit client replaces or retains the incumbent auditor with the intention of obtaining a favorable audit opinion. Opinion shopping may also be defined as auditor switching to avoid going concern opinion (Hardi et al, 2020).…”