The Importance of Business Development Incentives to Audit Partners: Evidence from the Propensity to Issue Modified Opinions to Group-Affiliated Audit Clients
研究发现，审计合伙人为了争取集团内其他成员的审计业务，更不愿对集团关联客户出具保留意见，且这种倾向在关联客户经济重要性较低时更强。
SUMMARY We analyze a unique incentive motivating audit partners to pursue new revenue streams from potential audit clients related to incumbent clients. In auditing clients belonging to business groups, a partner who issues a modified audit opinion (MAO) to a group-affiliated client risks losing not only that client but also the opportunity to extend their audit services to other member companies. We document that partners are less likely to render MAOs to group-affiliated clients when other group members are large relative to the partners’ client portfolio, and this relation intensifies when the incumbent group-affiliated clients themselves are economically less important. We also find that partners who issue MAOs to group-affiliated clients underperform in attracting new clients from the same business group. Further, investors perceive that audit quality is higher in these partners’ non-group-affiliated clients, reflecting that reputation protection forces discipline partners to resist the temptation to issue unwarranted clean opinions. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: M42.