Auditor Switching and Abnormal Returns

Abstract

The main factor that every investor pays special attention to in his decisions is a return. What is important for users of financial information is not the procedures and principles used in accounting, but the exit from the financial system, because it helps them achieve their goals. Many capital market concerns focus on accounting and auditing operations. Therefore, the independence of the auditor is the basis of public trust in the audit process and the assurance of auditors` reports. For this purpose, the purpose of this study is to investigate the effect of auditor switching on abnormal returns. Therefore, three hypotheses have been formulated and a sample consisting of 365 companies listed on the Tehran Stock Exchange during the years 2010 to 2020 has been selected. The results indicate that lateral auditor switching has no significant effect on abnormal returns. Also, between the CU switch and CD switch, the CD switch has a negative and significant effect on abnormal returns.