The purpose of this study is to examine whether the timing of auditor terminations signals the riskiness of client firms.,This empirical study uses a sample of auditor switches during 2003-2014 to conduct univariate tests and multivariate regression analyses. Auditor switches occurring after the audit report date but before the shareholders’ meeting are classified as “planned” terminations and auditor switches that occur outside of this window are classified as “abrupt” terminations.,First, abrupt terminations are more strongly related to client risk factors than planned terminations. Second, relative to planned terminations, abrupt terminations are more likely to result from an auditor resignation rather than a client dismissal. Third, abrupt termination firms are more likely to have internal control weaknesses and experience delistings in the following year. Future operating performance is also worse after an abrupt termination. Finally, auditors and investors view abrupt terminations as riskier than planned terminations.,As the timing of the auditor termination is publicly available information, it can provide an important signal of deteriorating financial performance to shareholders and potential investors. Abrupt terminations could be costly to shareholders because those firms likely have lower quality financial reporting (due to internal control weakness) and deterioration of future operating performance.,While concurrent studies investigate the relation between the timing of new auditor appointment and audit quality, this is the first study to document the relation between the timing of auditor termination and the riskiness of client firms.

中文翻译：

---

终止审计师的时间和客户公司的风险

本研究的目的是检查审计师离职的时间是否预示着客户公司的风险。该实证研究使用2003-2014年间的审计师转换样本进行单变量检验和多元回归分析。在审计报告日期之后但在股东大会之前发生的审计师转换被归类为“计划中的”终止，而在此窗口之外发生的审计师转换被归类为“突然的”终止。首先，突然终止与客户风险更紧密比计划终止的因素。其次，相对于计划中的解雇，突然解雇更可能是审计师辞职而不是客户解雇。第三，突然终止的公司更有可能在第二年出现内部控制弱点并经历退市。突然终止后，未来的运营表现也会更糟。最后，审计师和投资者将突然离职视为比计划中的离职风险更高。由于审计师离职的时机是公开可用的信息，因此可以为股东和潜在投资者提供恶化财务业绩的重要信号。突然离职对股东而言可能会造成高昂的代价，因为这些公司的财务报告质量可能较低（由于内部控制薄弱）以及未来经营业绩的恶化。