Abstract
PurposeThe purpose of this study is to examines whether clients’ share prices responded to three events, including the Securities and Exchange Commission (SEC) launch of administrative proceedings against five Chinese accounting firms on December 3, 2012, for their failure to hand over audit work papers due to conflict of jurisdiction; the issuance of SEC Administrative Law Judge Elliot’s ruling on January 22, 2014; and the settlement of the administrative proceedings on February 6, 2015.Design/methodology/approachThis study uses the Schipper and Thompson approach.FindingsIt is found that share prices responded negatively around December 3, 2012, for USA-listed Chinese companies who were audited by Chinese auditors.Originality/valueThis study provides evidence on how share prices reacted to SEC enforcement actions against an affair of non-audit failure.
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