1. Inicio keyboard_arrow_right
  2. Investigaciones

Investigación

Artículo en revista académica

calendar_month Publicación: 17/01/2025

The effects of Audit Firm Rotations and Retentions: An event study in Chile

Autor: Antonio Aninat, Álvaro Bustos, Julio Riutort

Abstract

 

We study differences in markets reactions towards securities issued by firms that announce an external auditor’s rotation instead of an external auditor’s retention. We carry out an event study of publicly traded Chilean companies (100 % of the non-financial component of the main Chilean Stock Indexes) that announced a rotation or retention from 2004 to 2019. During those years, from 2009 to 2012, two major corporate scandals significantly affected Chilean financial markets. We find that, during the period without scandals, the market reacted more positively when a company announced the retention instead of the rotation of its auditor, however, during the period with scandals, the market reacted more positively when a company announced the rotation instead of the retention of its auditor. We rule out possible bias in the informational content of the events.  Our results suggest that, during the period without (with) scandals, the start-up costs and know how losses of an auditor’s change dominated (were dominated by) the improvements in auditor’s independence associated with the change. To support our hypothesis, we perform several tests and point out differences between factual and perceived effects. We discuss implications for firms and regulators.

Fuente: European Journal of Law and Economics

IF: 1

Comparte esta publicación