Matching Items (2)
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- All Subjects: Audit
- Creators: Lamoreaux, Phillip
Description
This case study sought to comparatively analyze well-publicized auditor-client lawsuits between the years 2008 and 2018. The five lawsuits were all filed following the events on the Financial Crisis of 2008. This was done as the 2008 Financial Crisis signified a turning point in many prominent financial firms and the modern day economic landscape. With focus on the Big 4 Auditing firms as the defendants, the findings of this paper will allow for further analysis into the most critical aspects of these types of lawsuits. Specifically, pertaining to the cases’ both similar and dissimilar components. The five cases analyzed in this paper found common factors pertaining to the role of bankruptcy, as well as the role of the In Pari Delicto Doctrine in the defense strategy. Upon summary, it was determined the most successful iteration of the doctrine occurred in those cases where the strategy was combined with other laws and precedents. Furthermore, it was determined the failure of the doctrine in initial court proceedings such as, the motion to dismiss and the motion for summary judgement, lead to instances of settlement. Additionally, the cases primarily involved fraudulent activities or accounting errors, and focused on the role of the auditor in the collapse of the various clients’ firms. In the case of accounting errors, cases typically ended in settlement as well. After careful analysis, it can be inferred cases involving fraudulent behavior on the part of the clients, have a substantial impact on the successful utilization of the In Pari Delicto Doctrine. In the future, the scope of this case study can be expanded beyond well-publicized lawsuits.
ContributorsPatel, Tejal (Author) / Lamoreaux, Phillip (Thesis director) / Maksymov, Eldar (Committee member) / School of Accountancy (Contributor) / Barrett, The Honors College (Contributor)
Created2019-05
Description
An audit increases the credibility of financial reports by reducing the uncertainty in financial information. A change of auditor will prompt investors to reevaluate this uncertainty. I examine the association between auditor changes and the pricing of information risk using the Fama-French asset pricing model augmented with accounting- based information risk factors. On average, I find that the pricing of information risk decreases after an auditor change, suggesting that investors are less concerned about information risk after an auditor change. However, for auditor changes that involve auditor resignations, disagreements, and movements away from a Big 4 auditor, I find an increase in the pricing of information risk, implying that these changes are associated with a weakened information environment. I also show that market returns surrounding the change announcement are correlated with the future change in perceived information risk. My study contributes to the debate surrounding mandatory auditor rotation and auditor tenure by suggesting that not all auditor changes are perceived the same way by investors.
ContributorsMyers, Noah (Author) / Lamoreaux, Phillip (Thesis advisor) / Kaplan, Steven (Thesis advisor) / Baugh, Matthew (Committee member) / Arizona State University (Publisher)
Created2021