Pricing Opinion Shopping: Evidence from an Emerging Debt Market

Heesun Chung, Jaehee Jo and Catherine Heyjung Sonu

Emerging Markets Finance and Trade, 2025, vol. 61, issue 13, 3989-4013

Abstract: We examine whether opinion shopping (OS)—the opportunistic practice of switching auditors to obtain a favorable audit opinion—is priced in an emerging debt market. Using data from Korean listed firms from 2005 to 2020, we find that firms engaging in OS-driven auditor switches face higher debt costs compared to those switching for other reasons or retaining their auditors. The effect is more pronounced when corporate governance, measured by foreign ownership and audit committee presence, is weak and when firms switch to non-Big 4 auditors. Our findings suggest that debt market participants perceive OS-driven auditor switches as a signal of heightened credit risk and respond by demanding higher risk premiums. This study is among the first to document the adverse consequences of OS in the debt market, highlighting important implications for regulators to establish policies that protect auditor independence and enhance oversight of firms with weaker governance, for investors to exercise increased caution when assessing firms that switch auditors for OS, and for managers to consider the potential negative effect of OS on firm valuation.

Date: 2025
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DOI: 10.1080/1540496X.2025.2500445

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