The Empirical Investigation of Auditors'' Lowballing Tendency in Taiwan

• Main Authors: Chu, Li-Ju, 朱麗如
• Other Authors: Kok-Kun Choi
• Format: Others
• Language: zh-TW
• Published: 1996
• Online Access: http://ndltd.ncl.edu.tw/handle/82527675701370077306

碩士 === 淡江大學 === 會計學系 === 84 === "Low-balling" refers to the pricing of audit service below its cost during initial audit engagement. This phenomenon has been subject of hot debate in the accounting literature. From the perspective of audit client and social welfare analysts, fee cutting is a natural and welcome outcome of market competition, however, the quality of the service would probably be undermined. The purpose of this study is to investigate any existence of "Low-balling" tendency among public accountants in Taiwan, to identify factors affecting their tendency, and to provide the regulatory authority suggestion regarding regulation matters. This research primarily relies on the Classical Multidimensional unfolding technique (MDU) to construct a two dimensional visual map (i.e., the Euclidean space) to!classify CPAs into five low balling situations. The CPAs thus identified are then analyzed using Chi-square test of independence to idendity any factors which are significantly different between high and low tendency groups for each low-balling situation. The result suggests that a high proportion of sampled CPA''s have tendency to low-ball, implying an important factor which would likely be conducive to subsequent low-balling activity. Except those respondents who have admitted that independence is a primary filter in service contract, all CPA''s who tend to low- ball believe that they could maintain their independence when they render their service; however, the pricing of service below cost has actually affected the guideline of maintaining apparent independence of CPA''s. The public will be doubtful if the auditor could still maintain their independent mental attitude when they are facing decision to renew their continuing service in the future. The existence of low-balling tendency among sampled subjects should be of concerned to the relevant authority, if this phenomenon also exist in other CPA''s not being examined by this study.