We investigate whether the financial riskiness of large U.S. audit firm clienteles varied with the changing audit litigation liability environment during the period 1975–99. Partitioning the period of study into four distinct periods (a benchmark period (1975–84), a period of increasing concerns about litigation liability (1985–89), a period of lobbying for reform (1990–94), and a post-relief p...

The reality and perception of auditor independence is fundamental to public confidence in financial reporting. A new Independence Standards Board was set up in the U.S. in 1997 and the European Union (EU) is currently seeking to establish a common core of independence principles (EC Green Paper 1996). This paper explores, using a questionnaire instrument, U.K. interested parties' perceptions of...

This study examines how lawsuits against auditors affect the audit pricing and client acceptance strategies of both the audit offices responsible for the failed audit and other audit offices of the same audit firm. We find that non-litigation offices of litigation audit firms decrease their fees following the filing of a lawsuit. However, audit offices involved in litigation increase their audi...

We provide evidence from a large-scale field experiment on the causal effects of audit rules on compliance in a market for long-term care. In this setting care should be provided quickly and, therefore, the gatekeeper introduced ex-post auditing. Our results do not show significant effects of variations in random audit rates and switching to a conditional audit regime on the quantity and qualit...