Share price response to the SEC administrative proceedings against Chinese auditors. Issue 9 (23rd September 2019)

• Record Type: Journal Article
• Authors: Liu, Guoping; Sun, Jerry
• Is Part Of: Managerial auditing journal. Volume 34:Issue 9(2019)
• Page Start: 1131
• Page End: 1148
• Publication Date: 2019-09-23
• Subjects: SEC -- Administrative proceedings -- Chinese auditors -- Share price response; Auditing, Internal -- Periodicals; Management audit -- Periodicals; 657.45
• DOI: 10.1108/MAJ-05-2018-1883
• Languages: English
• ISSNs: 0268-6902

Abstract

Abstract : Purpose: The purpose of this study is to examines whether clients' share prices responded to three events, including the Securities and Exchange Commission (SEC) launch of administrative proceedings against five Chinese accounting firms on December 3, 2012, for their failure to hand over audit work papers due to conflict of jurisdiction; the issuance of SEC Administrative Law Judge Elliot's ruling on January 22, 2014; and the settlement of the administrative proceedings on February 6, 2015. Design/methodology/approach: This study uses the Schipper and Thompson approach. Findings: It is found that share prices responded negatively around December 3, 2012, for USA-listed Chinese companies who were audited by Chinese auditors. Originality/value: This study provides evidence on how share prices reacted to SEC enforcement actions against an affair of non-audit failure.