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The determinants of the market reaction to an announcement of a change in auditor

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dc.contributor.authorAlbrecht, William Daviden
dc.contributor.committeechairRichardson, Frederick M.en
dc.contributor.committeememberEckel, Catherine C.en
dc.contributor.committeememberKubin, Konrad W.en
dc.contributor.committeememberLamy, Robert E.en
dc.contributor.committeememberMcGuirk, Anya M.en
dc.contributor.committeememberSopariwala, Parvez R.en
dc.contributor.departmentAccounting and Information Systemsen
dc.date.accessioned2014-03-14T21:21:28Zen
dc.date.adate2005-10-19en
dc.date.available2014-03-14T21:21:28Zen
dc.date.issued1990-01-11en
dc.date.rdate2005-10-19en
dc.date.sdate2005-10-19en
dc.description.abstractThe Securities and Exchange Conunission (1974) has stated that the one of the fundamental underpinnings of federal securities law is the external auditor opinion of registrant financial statements. The SEC believes that the corporate practice of voluntary auditor change may be perceived by the investing public as attempted opinion shopping. The monitoring hypothesis of Jensen and Meckling (1976), on the other hand, posits that companies may change auditors in an attempt to control net agency costs. The objective of this dissertation is determine if the monitoring hypothesis is descriptive of the phenomenon of voluntary auditor change. The monitoring hypothesis posits that changes in net agency costs are related to the change in auditor quality at the time of an auditor change. and that both changes in agency costs and change in auditor quality are related to the market reaction to the auditor change. Auditor changes from 1980 to 1986 for New York Stock Exchange and American Stock Exchange companies were analyzed. The results indicate that changes in agency costs are related to change in auditor quality, as measured by the difference, from the old auditor to the new, in the auditor's share of the industry audit fees for the company that is changing auditors. Significant variables that measure changes in agency costs aregrowth in company sales, change in long-term compensation plans, and change in the dividend payout ratio. The results also indicate that changes in agency costs are related to market reaction to a change in auditors, but that the change in auditor quality is not. Variables that are significant in explaining the relationship are change in the debt ratio, change in the holdings of the largest stockholder, and prior receipt of a qualified opinion or disclosure of a disagreement between the company and the previous auditor. The results provide strong support for the monitoring hypothesis and weak support for the opinion shopping hypothesis.en
dc.description.degreePh. D.en
dc.format.extentxiii, 259 leavesen
dc.format.mediumBTDen
dc.format.mimetypeapplication/pdfen
dc.identifier.otheretd-10192005-113251en
dc.identifier.sourceurlhttp://scholar.lib.vt.edu/theses/available/etd-10192005-113251/en
dc.identifier.urihttp://hdl.handle.net/10919/39947en
dc.language.isoenen
dc.publisherVirginia Techen
dc.relation.haspartLD5655.V856_1990.A527.pdfen
dc.relation.isformatofOCLC# 23421741en
dc.rightsIn Copyrighten
dc.rights.urihttp://rightsstatements.org/vocab/InC/1.0/en
dc.subject.lccLD5655.V856 1990.A527en
dc.subject.lcshCorporate profits -- United States -- Accountingen
dc.subject.lcshCorporations -- United States -- Auditingen
dc.subject.lcshDisclosure in accountingen
dc.subject.lcshStocks -- Prices -- United Statesen
dc.titleThe determinants of the market reaction to an announcement of a change in auditoren
dc.typeDissertationen
dc.type.dcmitypeTexten
thesis.degree.disciplineAccounting and Information Systemsen
thesis.degree.grantorVirginia Polytechnic Institute and State Universityen
thesis.degree.leveldoctoralen
thesis.degree.namePh. D.en

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