Dual 8-K filings and auditor downward switches

Stephanie Monteiro Miller ()
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Stephanie Monteiro Miller: Quinnipiac University

International Journal of Disclosure and Governance, 2022, vol. 19, issue 2, No 5, 204-217

Abstract: Abstract In the USA, firms announce auditor changes in either one or multiple filings of Form 8-K, depending on the length of time between the end of the incumbent audit engagement and the engagement of the successor auditor. I find that auditor changes reported using multiple 8-K filings (referred to as “dual 8-K filings”) are associated with a 7% greater likelihood of downgrading from a big-N to a non-big-N audit firm. Dual 8-K filings provide information that is incremental to the length of the auditor search period. In addition, they provide a timelier signal, as it is immediately observable upon the initial 8-K filing whether a successor auditor has been named or a second 8-K filing announcing the successor auditor is expected to follow. The distinction between single and dual 8-K filings outperforms the distinction between auditor resignations and dismissals in predicting downward auditor switches, though the most negative auditor changes are those reported both as auditor resignations and using dual 8-K filings. My results suggest that dual 8-K filings are a strong signal of risk associated with auditor changes that should be considered by academics and practitioners alike.

Keywords: Auditor changes; 8-K filings; Downward auditor switches; Auditing (search for similar items in EconPapers)
JEL-codes: M40 M42 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1057/s41310-021-00136-y

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