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Research into the significance of auditor credibility shows that firms distinguish the services of a more credible auditor. Further, demand for levels of auditor credibility is shown to vary across firms purchasing audit services. This study extends the line of enquiry regarding the effect of auditor credibility by examining the reaction of client firms to changes in their auditors credibility. Also, the firm characteristics associated with a reaction to a change in credibility are examined. The results suggest that clients of the Big Eight firms react differently than clients of smaller audit firms to the change in credibility.
International Journal of Auditing – Wiley
Published: Mar 1, 1997
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