| Summary: | 碩士 === 國立臺灣大學 === 會計學研究所 === 103 === Recent accounting scandals happened around the world cause investors concern about the audit quality provided by accounting profession. This thesis examines whether audit failures have contagion effects on the quality of other audits conducted by the audit firm and auditor.
I use discretionary accruals as proxy for audit failures. The empirical results show that the relationship between discretionary accruals and the audit firm which occurred an audit failure is negative, which is inconsistent with the hypothesis that the audit failure occurred within the audit firm has the contagion effect. In contrast, if an auditor occurs an audit failure, our results suggest that the other office, which conducted by the same auditor, will have higher abnormal accrual than the auditor, who doesn’t occur the audit failure.
In summary, this study shows that an audit failure from an auditor have a contagion
effect.
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