CONSERVATISM OF THE BIG SIX AUDIT FIRMS
163
CONSERVATISM OF THE BIG SIX AUDIT FIRMS
AND GOING-CONCERN MODIFIED AUDIT REPORTS
Marshall A. Geiger, University of Richmond
K. Raghunandan, Texas A & M International University
ABSTRACT
This study examines whether Big 6 audit farms exhibit a more conservative reporting posture
than non-Big 6 audit firms by examining differences in "reporting errors "for going concern
uncertainties. Specifically, based on an analysis of relative error costs, we hypothesize that Big 6
firms are more conservative in their reporting decisions, leading to differences in error proportions
for both type 1 (companies receiving going-concern modified opinions that do not fail) and type II
(failed companies that did not receive a prior going-concern modification) reporting errors.
Evidence from samples of companies with first-time going-concern modified opinions and bankrupt
companies is generally consistent with the hypotheses. Big 6 firms were found to have a significantly
higher type I reporting error rate when failure was defined as filing for bankruptcy or entering
default on debt payments, and a significantly lower type II reporting error rate than non-Big 6 firms.
Our findings suggest that reporting decisions are associated with the relative magnitude of the firms'
expected losses, resulting in more conservative reporting decisions regarding the issuance of going
-concern modified audit reports for Big 6 firms.
INTRODUCTION
Prior research has addressed the existence of differences between Big 6 and non-Big 61 audit
firms on a variety of dimensions, including audit quality, audit fees, client retention and industry
concentration (DeAngelo, 1981; Palmrose, 1986; Francis & Simon, 1987; Simunic & Stein, 1996;
Gul, 1999; Hogan & Jeter, 1999). Some recent studies have also examined whether the largest audit
firms are more conservative than smaller audit firms in various settings. Recent papers examining
issues related to the market for audit services have documented that Big 6 firms are (a) less
concentrated in industries perceived as having high litigation risk compared to those perceived as
having low litigation risk (Hogan & Jeter, 1999), (b) less likely to accept clients where the
predecessor auditor resigned (Raghunandan & Rama, 1999), and (c) have maintained historically
less risky client portfolios than non-Big 6 auditors (Francis & Reynolds, 1999). While these studies
have examined several facets of the auditor-client interaction, no study has examined Big 6 firms
compared to non-Big 6 firms for conservatism in their resultant reporting decisions - the final
outcome of the audit process.
Audit reporting, and particularly reporting on going-concern uncertainties, continues to
remain an important issue for U. S. legislators and the public accounting profession. This is
evidenced by the fact that the U. S. recently enacted the Private Securities Litigation Reform Act
Academy of Accounting and Financial Studies Journal, Volume 6, Number 1, 2002
The body of this manuscript is not reproduced in this posting. The full text of the manuscript is
available through most university libraries. Should you have difficulty in finding the full text,
you may acquire it from the original journal. Visit http://www.alliedacademies.org to find a link
to the original journal source.
179
13
We performed sensitivity analysis by including a dummy variable for firms in high-tech industries, as defined
in Kasznik and Lev (1995). In such analysis, the results remained substantively similar to those presented in
Table 4 and the Big 6 variable continued to remain significant (p < .05).
14
The financial stress indicators are based upon the measures used by prior researchers, such as McKeown et al.
(1991a). Note that the third factor used here, negative stockholder's equity, is a more stringent measure than
the negative retained earnings measure used by McKeown et al. (1991a).
15
Mutchler et al. (1997) found that their Big 6 variable was not significant in explaining differences in audit
opinions prior to bankruptcy. One possible reason for our different results may be the different nature of the
samples. In particular, Mutchler et al. (1997) include only companies traded on the NYSE or AMEX, while our
sample includes a substantial number of companies (191 out of 247) not traded on these exchanges. Companies
listed on the NYSE and AMEX may be different along many dimensions than companies not traded on such
exchanges.
REFERENCES
American Institute of Certified Public Accountants. (1988). Statement on Auditing Standards No.
59, The Auditor's Consideration of an Entity's Ability to Continue as a Going Concern. New
York: AICPA.
Altman, E. I. (1982). Accounting implications of failure prediction models. Journal of Accounting
Auditing and Finance, (Fall), 4-19.
Bamber, M., L. Bamber & M. Schoderbek. (1993). Audit structure and other determinants of audit
report lag: An empirical analysis. Auditing: A Journal of Practice and Theory, (Spring), 123.
Beatty, R.P. (1993). The economic determinants of auditor compensation in the initial public
offerings market. Journal of Accounting Research,(Autumn), 294-302.
Carcello, J., D. Hermanson & F. Huss. (1995). Temporal changes in bankruptcy-related reporting.
Auditing: A Journal of Practice and Theory, (Fall), 133-143.
Carcello, J., D. Hermanson & F. Huss. (1997). The effect of SAS No. 59: How treatment of the
transition period influences results. Auditing: A Journal of Practice and Theory, (Spring),
114-123.
Carcello, J., D. Hermanson & F. Huss. (1999). Going-concern opinions: The effects of partner
compensation plans and client size. Auditing: A Journal of Practice and Theory,
(forthcoming).
Academy of Accounting and Financial Studies Journal, Volume 6, Number 1, 2002
180
Carcello, J. & Z. Palmrose. (1994). Auditor litigation and modified reporting on bankrupt clients.
Journal of Accounting Research, (Supplement): 1-30.
Chen, K. C. W. & B.K. Church. (1992). Default on debt obligations and the issuance of goingconcern opinions. Auditing: A Journal of Practice and Theory, (Fall), 30-49.
Chen , K. C. .W. & Wei. (1993). Creditors' decisions to waive violations of accounting-based debt
covenants. The Accounting Review, (April), 218-232.
Chow, C. W. & S. Rice. (1982). Qualified Audit Opinions and Auditor Switching. The Accounting
Review, (April), 326-335.
Clarkson, P. & D. A. Simunic. (1994). The association between audit quality, retained ownership
and firm-specific risk in US vs. Canadian IPO markets. Journal of Accounting and
Economics, 17, 207-228.
DeAngelo, L. E. (1981). Auditor size and audit quality. Journal of Accounting and Economics, 3,
183-199.
DeFond, M. L. (1992). The association between changes in client firm agency costs and auditor
switching. Auditing: A Journal of Practice and Theory, (Fall), 16-31.
Foster, B.P., T.J. Ward & J. Woodroof. (1998). An analysis of the usefulness of debt defaults and
going-concern opinions in bankruptcy risk assessment. Journal of Accounting, Auditing, and
Finance, (Summer), 331-371.
Francis, J. R. (1984). The effect of audit firm size on audit prices: A study of the Australian market.
Journal of Accounting and Economics, (August), 133-151.
Francis, J. R. & D. T. Simon. (1987). A test of audit pricing in the small client segment of the U.S.
audit market. The Accounting Review, (January), 145-157.
Francis, J. R. & E.R. Wilson. (1988). Auditor changes: A joint test of theories relating to agency
costs and auditor differentiation. The Accounting Review, 63 (October), 663-682.
Francis, J. R. & J. K. Reynolds. (1999). Evidence on risk-based client screening by Big Six audit
firms. Working paper, University of Missouri-Columbia.
Francis, J. R., E. L. Maydew & H. C. Sparks. (1999). The role of Big 6 auditors in the credible
reporting of accruals. Auditing: A Journal of Practice and Theory, (Fall), 17-34.
Academy of Accounting and Financial Studies Journal, Volume 6, Number 1, 2002
181
Geiger, M. A., K. Raghunandan & D. V. Rama. (1998). Cost associated with going-concern
modified audit opinions: An analysis of auditor changes, subsequent opinions, and client
failures. Advances in Accounting, 16, 117-139.
Gul, F. A. (1999). Audit prices, product differentiation and economic equilibrium. Auditing: A
Journal of Practice and Theory, (Spring), 90-100.
Hopwood, W., J. McKeown & J. Mutchler. (1989). A test of the incremental explanatory power of
opinions qualified for consistency and uncertainty. The Accounting Review, (January), 28-48.
Hogan, C. E. & D. C. Jeter. (1999). Industry specialization by auditors. Auditing: A Journal of
Practice and Theory, (Spring), 1-17.
Johnson, W. B. & T. Lys. (1990). The market for audit services: Evidence from voluntary auditor
changes. Journal of Accounting and Economics, (January), 281-308.
Kasznik, R. & B. Lev. (1995). To warn or not to warn: Management disclosures in the face of
earnings surprise. The Accounting Review, (January), 113-134.
Louwers,T. (1998). The relation between going-concern opinions and the auditor's loss function.
Journal of Accounting Research, (Spring), 143-156.
McKeown, J. C., J. F. Mutchler & W. Hopwood. (1991a). Towards an explanation of auditor failure
to modify the audit opinion of bankrupt companies. Auditing: A Journal of Practice and
Theory, (Supplement): 1-13.
McKeown, J. C., J. F. Mutchler & W. Hopwood. (1991b). Reply. Auditing: A Journal of Practice
and Theory, (Supplement): 21-24.
Menon, K. & D. D. Williams. (1999). Error cost and auditors' termination decisions. Journal of
Accounting, Auditing & Finance, (Spring), 95-123.
Morris, M. H. & W. D. Nichols. (1988). Consistency exceptions: Materiality judgments and audit
firm structure. The Accounting Review, (April), 237-254.
Morris R. E. & J. R. Strawser. (1999). An examination of the effect of CPA firm type on bank
regulators' closure decisions. Auditing: A Journal of Practice & Theory, (Fall), 142-158.
Mutchler, J. (1984). Auditor's perceptions of the going-concern opinion. Auditing: A Journal of
Practice & Theory, (Spring), 17-30.
Academy of Accounting and Financial Studies Journal, Volume 6, Number 1, 2002
182
Mutchler, J. (1985). A multivariate analysis of the auditor's going-concern opinion decision. Journal
of Accounting Research, (Autumn), 668-682.
Mutchler, J., W. Hopwood & J.C. McKeown. (1997). The influence of contrary information and
mitigating factors on audit opinion decisions on bankrupt companies. Journal of Accounting
Research, (Autumn), 295-310.
Mutchler, J. & D. D. Williams. (1990). The relationship between audit technology, client risk
profiles, and the going-concern opinion decision. Auditing: A Journal of Practice & Theory,
(Fall), 39-54.
Nichols, D. R. & D. B. Smith. (1983). Auditor credibility and auditor changes. Journal of
Accounting Research, (Autumn), 534-544.
Ohlson, J. A. (1980). Financial ratios and the probabilistic prediction of bankruptcy. Journal of
Accounting Research, (Spring), 109-131.
Palmrose, Z. V. (1986). Audit fees and auditor size: Further evidence. Journal of Accounting
Research, (Spring), 97-110.
Pratt, J. & J.D. Stice. (1994). The effects of client characteristics on auditor litigation risk
judgments, required audit evidence, and recommended audit fees. The Accounting Review,
(October), 639-656.
Private Securities Litigation Reform Act: 1995. Public Law 104-67. Washington, D.C.:GPO.
Raghunandan, K. & D. V. Rama. (1995). Audit reports for companies in financial distress: Before
and after SAS No. 59. Auditing: A Journal of Practice and Theory, (Spring), 50-63.
Raghunandan, K. & D. V. Rama. (1999). Auditor resignations and the market for audit services.
Auditing: A Journal of Practice and Theory, (Spring), 124-134.
Simon D. & J.R. Francis. (1988). The effects of auditor change on audit fees: Test of price cutting
and price recovery. The Accounting Review, (April), 255-269.
Simunic, D. (1980). The pricing of audit services: Theory and evidence. Journal of Accounting
Research, (Spring), 161-190.
Simunic, D. & M. T. Stein. (1987). Product differentiation in auditing: Auditor choice in the
market for unseasoned new issues, Research Monograph No. 13 Vancouver: The Canadian
Certified General Accountants' Research Foundation).
Academy of Accounting and Financial Studies Journal, Volume 6, Number 1, 2002
183
Simunic, D. & M. T. Stein. (1990). Audit risk in a client portfolio context. Contemporary
Accounting Research, (Spring), 329-343.
Simunic, D. & M. T. Stein. (1996). The impact of litigation risk on audit pricing: A review of the
economics and the evidence. Auditing: A Journal of Practice and Theory, (Supplement):
119-134.
Spires, E. & D. Williams. (1990). Auditors' adoption of SAS 58 audit reports. Accounting Horizons,
(September), 76-82.
Teoh, S. & T. Wong. (1993). Perceived auditor quality and the earnings response coefficient. The
Accounting Review, 68, (April), 346-367.
U.S. House of Representatives. (1985). Hearings Before the Subcommittee on Oversight and
Investigations of the Committee on Energy and Commerce, (February 20), No. 99-17.
U.S. House of Representatives. (1990). Hearings Before the Subcommittee on Telecommunications
and Finance of the Committee on Energy and Commerce, (August 2), No.101-196.
Wheeler, S., K. Pany & E. Chewning. (1993). Inter-Firm differences in propensities to modify audit
opinions for pre-SAS No. 58 accounting principles changes. Accounting Horizons,
(September), 46-54.
Zmijewski, M. E. (1984). Methodological issues related to the estimation of financial distress
prediction models. Journal of Accounting Research, (Supplement), 59-82.
Academy of Accounting and Financial Studies Journal, Volume 6, Number 1, 2002
CONSERVATISM OF THE BIG SIX AUDIT FIRMS
AND GOING-CONCERN MODIFIED AUDIT REPORTS
Marshall A. Geiger, University of Richmond
K. Raghunandan, Texas A & M International University
ABSTRACT
This study examines whether Big 6 audit farms exhibit a more conservative reporting posture
than non-Big 6 audit firms by examining differences in "reporting errors "for going concern
uncertainties. Specifically, based on an analysis of relative error costs, we hypothesize that Big 6
firms are more conservative in their reporting decisions, leading to differences in error proportions
for both type 1 (companies receiving going-concern modified opinions that do not fail) and type II
(failed companies that did not receive a prior going-concern modification) reporting errors.
Evidence from samples of companies with first-time going-concern modified opinions and bankrupt
companies is generally consistent with the hypotheses. Big 6 firms were found to have a significantly
higher type I reporting error rate when failure was defined as filing for bankruptcy or entering
default on debt payments, and a significantly lower type II reporting error rate than non-Big 6 firms.
Our findings suggest that reporting decisions are associated with the relative magnitude of the firms'
expected losses, resulting in more conservative reporting decisions regarding the issuance of going
-concern modified audit reports for Big 6 firms.
INTRODUCTION
Prior research has addressed the existence of differences between Big 6 and non-Big 61 audit
firms on a variety of dimensions, including audit quality, audit fees, client retention and industry
concentration (DeAngelo, 1981; Palmrose, 1986; Francis & Simon, 1987; Simunic & Stein, 1996;
Gul, 1999; Hogan & Jeter, 1999). Some recent studies have also examined whether the largest audit
firms are more conservative than smaller audit firms in various settings. Recent papers examining
issues related to the market for audit services have documented that Big 6 firms are (a) less
concentrated in industries perceived as having high litigation risk compared to those perceived as
having low litigation risk (Hogan & Jeter, 1999), (b) less likely to accept clients where the
predecessor auditor resigned (Raghunandan & Rama, 1999), and (c) have maintained historically
less risky client portfolios than non-Big 6 auditors (Francis & Reynolds, 1999). While these studies
have examined several facets of the auditor-client interaction, no study has examined Big 6 firms
compared to non-Big 6 firms for conservatism in their resultant reporting decisions - the final
outcome of the audit process.
Audit reporting, and particularly reporting on going-concern uncertainties, continues to
remain an important issue for U. S. legislators and the public accounting profession. This is
evidenced by the fact that the U. S. recently enacted the Private Securities Litigation Reform Act
Academy of Accounting and Financial Studies Journal, Volume 6, Number 1, 2002
The body of this manuscript is not reproduced in this posting. The full text of the manuscript is
available through most university libraries. Should you have difficulty in finding the full text,
you may acquire it from the original journal. Visit http://www.alliedacademies.org to find a link
to the original journal source.
179
13
We performed sensitivity analysis by including a dummy variable for firms in high-tech industries, as defined
in Kasznik and Lev (1995). In such analysis, the results remained substantively similar to those presented in
Table 4 and the Big 6 variable continued to remain significant (p < .05).
14
The financial stress indicators are based upon the measures used by prior researchers, such as McKeown et al.
(1991a). Note that the third factor used here, negative stockholder's equity, is a more stringent measure than
the negative retained earnings measure used by McKeown et al. (1991a).
15
Mutchler et al. (1997) found that their Big 6 variable was not significant in explaining differences in audit
opinions prior to bankruptcy. One possible reason for our different results may be the different nature of the
samples. In particular, Mutchler et al. (1997) include only companies traded on the NYSE or AMEX, while our
sample includes a substantial number of companies (191 out of 247) not traded on these exchanges. Companies
listed on the NYSE and AMEX may be different along many dimensions than companies not traded on such
exchanges.
REFERENCES
American Institute of Certified Public Accountants. (1988). Statement on Auditing Standards No.
59, The Auditor's Consideration of an Entity's Ability to Continue as a Going Concern. New
York: AICPA.
Altman, E. I. (1982). Accounting implications of failure prediction models. Journal of Accounting
Auditing and Finance, (Fall), 4-19.
Bamber, M., L. Bamber & M. Schoderbek. (1993). Audit structure and other determinants of audit
report lag: An empirical analysis. Auditing: A Journal of Practice and Theory, (Spring), 123.
Beatty, R.P. (1993). The economic determinants of auditor compensation in the initial public
offerings market. Journal of Accounting Research,(Autumn), 294-302.
Carcello, J., D. Hermanson & F. Huss. (1995). Temporal changes in bankruptcy-related reporting.
Auditing: A Journal of Practice and Theory, (Fall), 133-143.
Carcello, J., D. Hermanson & F. Huss. (1997). The effect of SAS No. 59: How treatment of the
transition period influences results. Auditing: A Journal of Practice and Theory, (Spring),
114-123.
Carcello, J., D. Hermanson & F. Huss. (1999). Going-concern opinions: The effects of partner
compensation plans and client size. Auditing: A Journal of Practice and Theory,
(forthcoming).
Academy of Accounting and Financial Studies Journal, Volume 6, Number 1, 2002
180
Carcello, J. & Z. Palmrose. (1994). Auditor litigation and modified reporting on bankrupt clients.
Journal of Accounting Research, (Supplement): 1-30.
Chen, K. C. W. & B.K. Church. (1992). Default on debt obligations and the issuance of goingconcern opinions. Auditing: A Journal of Practice and Theory, (Fall), 30-49.
Chen , K. C. .W. & Wei. (1993). Creditors' decisions to waive violations of accounting-based debt
covenants. The Accounting Review, (April), 218-232.
Chow, C. W. & S. Rice. (1982). Qualified Audit Opinions and Auditor Switching. The Accounting
Review, (April), 326-335.
Clarkson, P. & D. A. Simunic. (1994). The association between audit quality, retained ownership
and firm-specific risk in US vs. Canadian IPO markets. Journal of Accounting and
Economics, 17, 207-228.
DeAngelo, L. E. (1981). Auditor size and audit quality. Journal of Accounting and Economics, 3,
183-199.
DeFond, M. L. (1992). The association between changes in client firm agency costs and auditor
switching. Auditing: A Journal of Practice and Theory, (Fall), 16-31.
Foster, B.P., T.J. Ward & J. Woodroof. (1998). An analysis of the usefulness of debt defaults and
going-concern opinions in bankruptcy risk assessment. Journal of Accounting, Auditing, and
Finance, (Summer), 331-371.
Francis, J. R. (1984). The effect of audit firm size on audit prices: A study of the Australian market.
Journal of Accounting and Economics, (August), 133-151.
Francis, J. R. & D. T. Simon. (1987). A test of audit pricing in the small client segment of the U.S.
audit market. The Accounting Review, (January), 145-157.
Francis, J. R. & E.R. Wilson. (1988). Auditor changes: A joint test of theories relating to agency
costs and auditor differentiation. The Accounting Review, 63 (October), 663-682.
Francis, J. R. & J. K. Reynolds. (1999). Evidence on risk-based client screening by Big Six audit
firms. Working paper, University of Missouri-Columbia.
Francis, J. R., E. L. Maydew & H. C. Sparks. (1999). The role of Big 6 auditors in the credible
reporting of accruals. Auditing: A Journal of Practice and Theory, (Fall), 17-34.
Academy of Accounting and Financial Studies Journal, Volume 6, Number 1, 2002
181
Geiger, M. A., K. Raghunandan & D. V. Rama. (1998). Cost associated with going-concern
modified audit opinions: An analysis of auditor changes, subsequent opinions, and client
failures. Advances in Accounting, 16, 117-139.
Gul, F. A. (1999). Audit prices, product differentiation and economic equilibrium. Auditing: A
Journal of Practice and Theory, (Spring), 90-100.
Hopwood, W., J. McKeown & J. Mutchler. (1989). A test of the incremental explanatory power of
opinions qualified for consistency and uncertainty. The Accounting Review, (January), 28-48.
Hogan, C. E. & D. C. Jeter. (1999). Industry specialization by auditors. Auditing: A Journal of
Practice and Theory, (Spring), 1-17.
Johnson, W. B. & T. Lys. (1990). The market for audit services: Evidence from voluntary auditor
changes. Journal of Accounting and Economics, (January), 281-308.
Kasznik, R. & B. Lev. (1995). To warn or not to warn: Management disclosures in the face of
earnings surprise. The Accounting Review, (January), 113-134.
Louwers,T. (1998). The relation between going-concern opinions and the auditor's loss function.
Journal of Accounting Research, (Spring), 143-156.
McKeown, J. C., J. F. Mutchler & W. Hopwood. (1991a). Towards an explanation of auditor failure
to modify the audit opinion of bankrupt companies. Auditing: A Journal of Practice and
Theory, (Supplement): 1-13.
McKeown, J. C., J. F. Mutchler & W. Hopwood. (1991b). Reply. Auditing: A Journal of Practice
and Theory, (Supplement): 21-24.
Menon, K. & D. D. Williams. (1999). Error cost and auditors' termination decisions. Journal of
Accounting, Auditing & Finance, (Spring), 95-123.
Morris, M. H. & W. D. Nichols. (1988). Consistency exceptions: Materiality judgments and audit
firm structure. The Accounting Review, (April), 237-254.
Morris R. E. & J. R. Strawser. (1999). An examination of the effect of CPA firm type on bank
regulators' closure decisions. Auditing: A Journal of Practice & Theory, (Fall), 142-158.
Mutchler, J. (1984). Auditor's perceptions of the going-concern opinion. Auditing: A Journal of
Practice & Theory, (Spring), 17-30.
Academy of Accounting and Financial Studies Journal, Volume 6, Number 1, 2002
182
Mutchler, J. (1985). A multivariate analysis of the auditor's going-concern opinion decision. Journal
of Accounting Research, (Autumn), 668-682.
Mutchler, J., W. Hopwood & J.C. McKeown. (1997). The influence of contrary information and
mitigating factors on audit opinion decisions on bankrupt companies. Journal of Accounting
Research, (Autumn), 295-310.
Mutchler, J. & D. D. Williams. (1990). The relationship between audit technology, client risk
profiles, and the going-concern opinion decision. Auditing: A Journal of Practice & Theory,
(Fall), 39-54.
Nichols, D. R. & D. B. Smith. (1983). Auditor credibility and auditor changes. Journal of
Accounting Research, (Autumn), 534-544.
Ohlson, J. A. (1980). Financial ratios and the probabilistic prediction of bankruptcy. Journal of
Accounting Research, (Spring), 109-131.
Palmrose, Z. V. (1986). Audit fees and auditor size: Further evidence. Journal of Accounting
Research, (Spring), 97-110.
Pratt, J. & J.D. Stice. (1994). The effects of client characteristics on auditor litigation risk
judgments, required audit evidence, and recommended audit fees. The Accounting Review,
(October), 639-656.
Private Securities Litigation Reform Act: 1995. Public Law 104-67. Washington, D.C.:GPO.
Raghunandan, K. & D. V. Rama. (1995). Audit reports for companies in financial distress: Before
and after SAS No. 59. Auditing: A Journal of Practice and Theory, (Spring), 50-63.
Raghunandan, K. & D. V. Rama. (1999). Auditor resignations and the market for audit services.
Auditing: A Journal of Practice and Theory, (Spring), 124-134.
Simon D. & J.R. Francis. (1988). The effects of auditor change on audit fees: Test of price cutting
and price recovery. The Accounting Review, (April), 255-269.
Simunic, D. (1980). The pricing of audit services: Theory and evidence. Journal of Accounting
Research, (Spring), 161-190.
Simunic, D. & M. T. Stein. (1987). Product differentiation in auditing: Auditor choice in the
market for unseasoned new issues, Research Monograph No. 13 Vancouver: The Canadian
Certified General Accountants' Research Foundation).
Academy of Accounting and Financial Studies Journal, Volume 6, Number 1, 2002
183
Simunic, D. & M. T. Stein. (1990). Audit risk in a client portfolio context. Contemporary
Accounting Research, (Spring), 329-343.
Simunic, D. & M. T. Stein. (1996). The impact of litigation risk on audit pricing: A review of the
economics and the evidence. Auditing: A Journal of Practice and Theory, (Supplement):
119-134.
Spires, E. & D. Williams. (1990). Auditors' adoption of SAS 58 audit reports. Accounting Horizons,
(September), 76-82.
Teoh, S. & T. Wong. (1993). Perceived auditor quality and the earnings response coefficient. The
Accounting Review, 68, (April), 346-367.
U.S. House of Representatives. (1985). Hearings Before the Subcommittee on Oversight and
Investigations of the Committee on Energy and Commerce, (February 20), No. 99-17.
U.S. House of Representatives. (1990). Hearings Before the Subcommittee on Telecommunications
and Finance of the Committee on Energy and Commerce, (August 2), No.101-196.
Wheeler, S., K. Pany & E. Chewning. (1993). Inter-Firm differences in propensities to modify audit
opinions for pre-SAS No. 58 accounting principles changes. Accounting Horizons,
(September), 46-54.
Zmijewski, M. E. (1984). Methodological issues related to the estimation of financial distress
prediction models. Journal of Accounting Research, (Supplement), 59-82.
Academy of Accounting and Financial Studies Journal, Volume 6, Number 1, 2002