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An Investigation Of The Association Between Auditor Switching And Negative Information, Michael Morris Grayson

Doctoral Dissertations

This study investigates the premise that certain types of negative information are associated with auditor switches. A data set of 305 auditor switches from 1976 to 1994, extracted from the Compustat data base (limited subscription), was analyzed using tests of proportions and nonparametric sign tests. The data set consists of negative information extracted from the switching companies' income statements (i.e., net losses or extraordinary items) or calculated from the items extracted (i.e., net income adjusted to reverse the effect of extraordinary items).

The initial results, based on tests which assumed random movement of net income, did not support the notion …