Opinion Shopping Research Articles

FACTORS INFLUENCING THE PROVISION OF GOING CONCERN AUDIT OPINION WITH COMPANY SIZE AS MODERATION

This study aims to analyze the effect of opinion shopping, financial distress, and company growth on going concern audit opinions with company size as moderation. The acceptance of the going concern audit opinion is due to doubts by the auditor about the company's future viability. The research method uses descriptive quantitative analysis using secondary data. The population of this study is state-owned enterprises (State-Owned Enterprises) listed on the IDX (Indonesia Stock Exchange) in 2020-2022 consisting of 24 companies. The sampling method used was purposive sampling which resulted in 72 companies. The data analysis method used is logistic regression analysis. This study proves that financial distress has a positive effect on going concern opinions, while shopping and company growth opinions do not affect going concern opinions. Company size in this study moderates the relationship of financial distress and company growth to going concern opinions, but company size does not moderate the effect of shopping opinions on going concern opinions.

The Effects of Regulated Auditor Tenure on Opinion Shopping: Evidence from the Korean Market

We examine the impact of regulated auditor tenure on the shopping for favorable audit reports. We predict that these regulations may affect auditors’ willingness to acquiesce and clients’ incentives to engage in opinion shopping. We draw from the unique Korean setting where both mandatory audit firm retention and mandatory rotation were implemented for all public firms in a staggered manner. Based on hand-collected audit reports, we identify harmful language in explanatory paragraphs. We define favorable audit reports as those with unqualified opinions and without any harmful explanatory language. We find that opinion shopping for favorable audit reports appears to subside after mandatory retention but increases after mandatory rotation, with the positive impact of mandatory retention offset by the negative impact of mandatory rotation. We add to the literature by examining the impact of regulated auditor tenure on opinion shopping and highlighting the potential unintended consequences of these regulatory attempts.

Pengaruh Financial Distress dan Opinion Shopping terhadap Penerimaan Opini Audit Going Concern: Studi Empiris pada Perusahaan Sektor Pertambangan Terdaftar di Bursa Efek Indonesia tahun 2018-2022

This study aims to examine the effect of financial distress, and opinion shopping on going concern audit opinion acceptance. The population in this study were all mining sector companies listed on the Indonesia Stock Exchange in 2018-2022. The sampling technique used is purposive sampling. The number of samples used in this study were 75 samples. Hypothesis testing is done by analyzing using data panel regression methods. The results showed that financial distress has a positive effect on going concern audit opinion acceptance, and opinion shopping has no effect on going concern audit opinion acceptance in mining sector companies listed on the Indonesia Stock Exchange in 2018- 2022.

Opinion shopping for tax advice: The effects of client narcissism, social bonds, and message framing

Contentious interactions can arise between a tax professional and client upon disagreement over a tax position. These interpersonal exchanges can lead to “opinion shopping” and represent a threat to voluntary tax compliance and the public interest. Opinion shopping is likely to increase in an era of rising narcissism because antagonistic narcissists are known to react aggressively to rejection of their views. To better understand drivers of opinion shopping, we conduct a quasi-experiment with 222 U.S taxpayers. We find clients with higher (lower) levels of antagonistic narcissism are more (less) likely to opinion shop and switch to another tax preparer. We also examine the efficacy of two theory-motivated moderators of client antagonistic narcissism: [1] tax professional – client social bonds and [2] persuasive messaging by the advisor. By doing so, we respond to calls to explore moderating influences on the undesirable effects of antagonistic narcissism while also providing novel insight into factors influencing taxpayer clients’ decision-making following interpersonal exchanges with a tax advisor. We find that while close social bonds and sanction warnings reduce opinion shopping among participants lower in antagonistic narcissism, they fail to do so among participants higher in antagonistic narcissism. Theory provides no basis for predicting a three-way interaction, and we find none. Contributions to the research literature, as well as implications for tax practice and policy internationally, are also discussed.

Pengaruh Kualitas Audit, dan Opinion Shopping Terhadap Penerimaan Opini Audit Going Concern (Studi Empiris pada Perusahaan Manufaktur yang Terdaftar di Bursa Efek Indonesia (BEI) Periode 2017-2020)

This study aims to examine the effect of audit quality and opinion shopping on acceptance of going concern audit opinions in manufacturing companies listed on the Indonesia Stock Exchange (IDX) for the 2017-2020 period. The research sample consisted of 15 companies. The method used was purposive sampling, the number of observations was 193 manufacturing companies listed on the IDX for the 2017-2020 period. Annual report data obtained by indo-exchange file(IDX). In this research, the analytical method used is logistic statistics with SPSS Version 21 for windows software. The results of this study indicate that audit quality and opinion shopping have no partial effect on acceptance of going-concern audit opinions. The results of the omnibus test (f test) show that audit quality and opinion shopping simultaneously influence acceptance of going-concern audit opinions.

OPINI AUDIT GOING CONCERN: SINYAL NEGATIF TERHADAP KEBERLANJUTAN OPERASIONAL PERUSAHAAN (STUDI LITERATUR)

The continuity of a company needs to be considered and maintained, especially in the midst of economic conditions full of intense competition. Companies will frequently have to contend with divergent interests between shareholders and management when maintaining operational shortages. The most effective way to manage such differences of interest is to hire an auditor. The auditor's role is to measure management performance and verify that financial reports are accurate. Furthermore, evaluating the financial statements' equality, auditors take a company's viability into consideration. The purpose of this study is to understanding the drivers that influence going concern audit opinions while evaluating the continuing company’s operations. The research methodology that uses is literature review. The results of the research demonstrate that debt default, earlier opinions, and audit delay all have an impact on the going concern audit opinions. Furthermore, opinion shopping has no impact on whether going concern audit opinions are accepted.

The Impact of the Characteristics of the Board of Directors on Auditor's opinion Shopping: Evidence from Egypt

The Impact of the Characteristics of the Board of Directors on Auditor's opinion Shopping: Evidence from Egypt

The Impact of Audit Committee Characteristics on Auditor’s Opinion Shopping

The Impact of Audit Committee Characteristics on Auditor’s Opinion Shopping

Retraction: International expansion and audit opinion shopping: A signaling perspective

Retraction: Ding, H. (2024). International expansion and audit opinion shopping: A signaling perspective. The Journal of Corporate Accounting & Finance. https://doi.org/10.1002/jcaf.22700The above article, published online on 14 February 2024 in Wiley Online Library (wileyonlinelibrary.com), has been retracted by agreement between the author, journal Editor‐in‐Chief Damir Tokic and Wiley Periodicals LLC. The retraction has been agreed following a report by the authors that confirmed methodological errors which produced incorrect regression results in the published article. Because the errors affect the full empirical tables, the results are fundamentally impacted, and the author and Editor‐in‐Chief agree that the article must be retracted.

Retracted: International expansion and audit opinion shopping: A signaling perspective

AbstractOpinion shopping is an essential indication of audit collusion. Hence, it is crucial to explore the driving factors of audit uopinion shopping to better control and address this issue. Drawing upon signaling theory, this paper explores the relationship between international expansion and audit opinion shopping and the moderating roles of internal control quality and auditors’ quality. We find that the higher the level of international expansion of an enterprise, the greater the likelihood of audit opinion shopping. Furthermore, we also find that high internal control quality and high auditor quality can weaken the positive relationship between international expansion and audit opinion shopping. Besides, heterogeneity analysis shows that the impact of international expansion on audit opinion shopping is more pronounced in non‐SOEs and firms which stay in the growth and maturity stage. This paper contributes to the antecedent research of audit opinion shopping and exposes the possible “dark side” of international expansion. Finally, this study may provide practical implications to help the authorities better regulate internationalized enterprises as well as contribute to the healthy development of the auditing market.

Internal control opinion shopping: Does initial audit fee discounting matter?

Both regulators and researchers are concerned that the lowballing of initial year audit fees may impair auditor independence (U.S. Senate 1977, 2002; American Institute of Certified Public Accountants (AICPA), 1978; Securities and Exchange Commission [SEC], 2000; Huang et al. 2015). Using a full sample of 1373 U.S. firm-year observations for which the client’s predecessor auditor reports an adverse SOX Section 404 internal control opinion, we find that in the following year a successor auditor who lowballs audit fees is more likely to issue a clean internal control opinion. The results hold when the predecessor auditors are dismissed, but not when the predecessors resign. We also find that firms are no more likely to succeed in opinion shopping when the proportion of audit committee financial experts is high. In addition, we find internal control opinion shopping occurs with initial fee discounting only in competitive audit markets and the period of a few years following the adoption of SOX (since 2007).

Do publicly traded companies engage in opinion shopping after receiving a going concern audit opinion? Evidence from U.S. firms in the post-SOX era

Audit opinion shopping continues to be of significant interest to regulators and is also of interest to investors and the public. This study examines whether in the post-SOX (Sarbanes-Oxley Act) era, publicly traded companies in the U.S. engage in the act of shopping for audit opinions after receiving a going concern opinion (GCO). We further examine whether auditor firm size (Big 4 versus non-Big 4) affects such activities. Using data from Compustat and Audit Analytics we identify financially distressed publicly-held U.S. firms between 2004 and 2015. Adopting the framework developed by Lennox (2000), we examine the difference in the probabilities between auditor switching and no-switching scenarios. We find evidence that public companies in the U.S. who receive GCOs are successful in shopping for clean audit opinions in a subsequent period. We also find that audit opinion shopping activities are more common among public companies who switch to non-Big 4 auditors as opposed to those who switch to Big 4 auditors. Our paper fills the gap in the literature by examining whether, in the post-SOX era, publicly-held firms in the U.S. engage in the act of shopping for audit opinions, after receiving a GCO.

Does opinion shopping impair auditor independence? Evidence from tax avoidance

In this study, we investigate whether a firm’s opportunistic switching of auditors for a favorable audit opinion, known as opinion shopping (OS), affects its tax avoidance activities. Using a sample of Korean firms over the 2006–2018 period, we find that firms that switch auditors for OS purposes engage in more aggressive tax avoidance than other firms. The association between OS-driven auditor switches and tax avoidance is more pronounced for switches to non-Big 4 auditors than to Big 4 auditors. The results are robust to various robustness tests that attempt to control for differences in the characteristics of OS and non-OS firms. Collectively, the findings suggest that auditors hired as a result of OS allow their clients to engage in more aggressive tax avoidance, which is consistent with impaired auditor independence. We contribute to the literature on OS by documenting evidence of the negative consequence of OS on corporate tax compliance. In addition, our findings suggest that firms’ tax and audit behaviors need to be monitored concurrently.

Navigating uncertainty: The dynamics of financial distress and opinion shopping ongoing concern audit opinions in the COVID-19 era

This study delves into the intricate relationship between financial distress and opinion shopping in the context of going concern audit opinions, particularly during the challenging COVID-19 pandemic. Focusing on non-financial firms listed on the IDX from 2019 to 2021, the study employed a non-probability, purposive sampling method for selecting relevant samples. Data collection was primarily conducted through non-participant observation, and logistic regression techniques were utilized for analysis. The novelty of this study lies in its temporal focus, situating the analysis within the unique financial and audit challenges posed by the pandemic. One of the key findings is the significant inverse correlation between financial distress, measured by the Altman Z-Score, and the likelihood of receiving a going concern audit opinion. The study demonstrates that increased financial distress significantly raises the probability of a firm receiving a going concern audit opinion. In contrast, the practice of opinion shopping, where firms might switch auditors to obtain a more favorable opinion, is found to decrease the likelihood of receiving such an opinion during the pandemic.

Third-Party Source Switches: Objective Valuation or Fair Value Opinion Shopping?

ABSTRACT Fair value estimates from external third-party sources are generally considered more reliable than internal estimates based on managerial inputs. However, even externally sourced estimates are subject to managerial opportunism, because firms can switch from one external source to another. In the context of life insurance companies that mostly rely on external sources, we posit that such source switches could be driven by managerial incentive either to faithfully report fair values (objective valuation) or to inflate estimates to avoid OTTI (opinion shopping). Our results support both motives. In instances in which the two incentives yield conflicting predictions for source switching, we find the opinion-shopping motive dominates. We also find that switches that increase fair value estimates are associated with a reduced OTTI likelihood and magnitude, especially for high-impairment-risk securities. On balance, our evidence suggests that opportunism with respect to source switching can compromise the reliability of externally sourced fair value estimates. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: G22; M41.

Determinan Penerimaan Opini Audit Going Concern (GCAO):

This study aims to examine the effect of Financial Distress and Prior Opinion on Going-Concern Audit Opinion, with Opinion Shopping as a moderating variable. This research topic is very important to study in analyzing the extent to which financial and non-financial factors affect the continuity of a company's business. This study uses a quantitative method with a total sample of 185 data points from 37 manufacturing companies listed on the Indonesia Stock Exchange (IDX) from 2017 to 2021. The data analysis used is panel data regression software Eviews 12. The research results prove that the acceptance of the going concern audit opinion by manufacturing sector companies was triggered by the high financial distress and receipt of the modified going concern audit opinion in the previous year. In addition, empirical studies prove that opinion shopping is not a moderating variable in relationships between financial distress and prior opinion on the acceptance of the going concern audit opinion.
 Keywords: Financial Distess, Prior Opinion, Going Concern Audit Opinion, Opinion Shopping

Pengaruh variabel keuangan & non-keuangan terhadap financial distress

This study aims to provide empirical evidence of the ability to predict financial distress using financial variables (current ratio, cash flow operation, leverage, gross profit margin, and return on assets) and non-financial variables (going concern opinion, audit report lag, opinion shopping, the additional state capital, and subsidies). Model testing uses three steps. First, financial ratios (CR, CFO, LEV, GPM, ROA); second, non-financial ratios (GCO, ARL, SHOP, ASC, SUB); and third, all variables at once. This study uses panel data (2011-2020) with a sample size of 50 Indonesian SOEs. Data analysis uses ordinal logistic regression. The first test results show that CR and ROA positively affect financial distress, while LEV and GPM have a negative effect. The second test results show ARL has a negative effect, while SHOP and SUB have a positive effect. Meanwhile, the third test results show LEV, GPM, and ASC have a negative effect, while ROA and SUB have a positive effect. Based on the r-squared and correctly predicted values, the third model test results are better than the first and second models. Statistically, the ability to predict financial distress that combines financial and non-financial ratios is better than models that only use financial and non-financial ratios. Financial ratios are the most consistent predictor of financial distress in terms of significance.

Determinan Penerimaan Opini Audit Going Concern (OAGC):

This study aims to examine the effect of Financial Distress and Prior Opinion on Going-Concern Audit Opinion, with Opinion Shopping as a moderating variable. This research topic is very important to study in analyzing the extent to which financial and non-financial factors affect the continuity of a company's business. This study uses a quantitative method with a total sample of 185 data points from 37 manufacturing companies listed on the Indonesia Stock Exchange (IDX) from 2017 to 2021. The data analysis used is panel data regression software Eviews 12. The research results prove that the acceptance of the going concern audit opinion by manufacturing sector companies was triggered by the high financial distress and receipt of the modified going concern audit opinion in the previous year. In addition, empirical studies prove that opinion shopping is not a moderating variable in relationships between financial distress and prior opinion on the acceptance of the going concern audit opinion.

Pengaruh Financial Distress dan Profitabilitas terhadap Opini Going Concern dengan Opini Shopping sebagai Variabel Pemoderasi

The purpose of this research is to determine the effect of financial distress and profitability on going concern opinion with opinion shopping as a moderating variable. This research used purposive sampling method as a sampling technique with 42 selected companies from the properties & real estate sector listed on the Indonesia Stock Exchange for the 2018-2020 period. This research uses secondary data obtained using documentation techniques from annual reports and financial reports. The data is analyzed using logistic regression analysis techniques using SPSS software. The results of this research showed that financial distress has no effect on going concern audit opinion while profitability has an effect. In addition, this research also showed that opinion shopping is unable to moderate the effects of these two variables on going concern opinion.

Goodwill impairment, auditor dismissal and opinion shopping–evidence from China

ABSTRACT Using listed companies from 2010 to 2019 in China, we investigate whether firms engage in opinion shopping activities when firms dismiss the auditors following a goodwill impairment. We find that firms tend to dismiss the incumbent auditors after receiving a goodwill impairment opinion and engage in opinion shopping with their successor auditors. Furthermore, the successor’s auditor quality is similar to the predecessor’s audit quality following a dismissal. Moreover, firms with low-quality internal control system and low analyst coverage level are more motivated to engage in opinion shopping subsequently after receiving a goodwill impairment opinion. Our findings would be of interest to corporate governance activists, auditors, investors and regulators.