How Does Investor Sentiment Influence Audit Opinion Shopping?

Summary

Audit and Assurance Accounting and Reporting Ethics

Researchers explore how the overall mood or sentiment of investors affects companies' attempts to shop around for favorable audit opinions, specifically regarding their internal control systems. In particular, the study looks at whether companies seek out more lenient auditors who will give them a clean bill of health on their internal controls over financial reporting, especially when investor enthusiasm is high, suggesting that these efforts are more about seizing the moment than reflecting true financial health.