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Laissez-faire or mandatory auditor rotation: The case of audit firm tenure and audit firm switching


Shafie, Rohami and Md Yusof, Mohd 'Atef and Md Hussain, Md Hairi (2004) Laissez-faire or mandatory auditor rotation: The case of audit firm tenure and audit firm switching. In: Fourth Asia Pacific Interdisciplinary Research in Accounting Conference, 4-6 July 2004, Grand Hyatt Hotel, Singapore.

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Abstract

The issue of audit tenure has been discussed since four decades age. Nowadays, due to the recent corporate scandals in the United States, the issue is discussed together with auditor independence that led to companies’ demise. Therefore, this study attempts to investigate the situation in Malaysia whereby no empirical study using archival data has been done. There are two major findings. First, the variable of audit firm tenure is positively significant relationship with going concern opinion. Second, when a client never changes its auditor since became a public listed company; there is a tendency to issue a clean opinion though the client suffers apparent financial problems. This implies that, “auditor change would do well, but forcing an unrealistic auditor rotation might not yield what it hopes for”. Therefore, we echo the importance of self-regulation and Laissez-faire practice in Malaysia as a better alternative than a mandatory auditor rotation.

Item Type: Conference or Workshop Item (Paper)
Additional Information: SO Code: 10974
Uncontrolled Keywords: Audit firm tenure, audit firm switching, laissez-faire, mandatory auditor rotation
Subjects: H Social Sciences > HF Commerce > HF5601 Accounting
Divisions: College of Business
Depositing User: Mr. Md Hairi Md Hussain
Date Deposited: 11 Mar 2014 01:00
Last Modified: 17 Mar 2014 08:11
URI: http://repo.uum.edu.my/id/eprint/10434

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