Client Security Price Reactions to the Laventhol and Horwath Bankruptcy
研究拉文索尔和霍沃斯会计师事务所破产公告前后，其审计客户股票价格出现显著负异常回报，并探讨了保险假说等解释。
On November 21, 1990, Laventhol and Horwath (henceforth LH), then the nation's seventh-largest public accounting firm, filed for protection under Chapter 11 of the U.S. Federal Bankruptcy Code. A portfolio of 75 LH client common stocks earned statistically significant risk-adjusted returns of -1.91% during the two-day trading period around the LH bankruptcy disclosure. We propose and investigate two explanations for these security price reactions. The insurance explanation presumes investor reliance on auditors to recover future investment losses (Kellogg [1984] and Stice [1991]). Recovery is conditioned on the auditor's ability to pay; therefore, the LH