The effect of Arthur Andersen's demise on clients' audit fees and auditor conservatism: international evidence

摘要: Using samples from 12 non-U.S.A. countries, we find that following Arthur Andersen's failure in the United States of America, successor Big-N auditors charged an audit fee premium for ex-Andersen clients compared to existing and non-Andersen switch-ins. We show this is not attributable Andersen switch-ins having lower prior earnings quality or bargaining power than also exhibit higher after switch do ongoing other These results suggest auditor conservatism. Furthermore, risk assessments are countries with weak legal extra-legal institutions. interpret result as suggesting effect lost reputation stronger when objective evidence uncertain because weaker supporting This first study document a direct countrywide institutions on assessment.