Title: Does auditor change reduce information asymmetry? An examination of the effect on bid-ask spread using a big or non-big auditor classification

Authors: Faten Hakim Ghorbel; Mohamed Ali Omri

Addresses: Research Unit Finance and Business Strategy (FIESTA), Faculté des Sciences Economiques et de Gestion de Tunis, University of Tunis El Manar, Campus Universitaire El Manar, B.P 248, El Manar II, 2092, Tunis, Tunisia ' Research Unit Finance and Business Strategy (FIESTA), Faculté des Sciences Economiques et de Gestion de Tunis, University of Tunis El Manar, Campus Universitaire El Manar, B.P 248, El Manar II, 2092, Tunis, Tunisia

Abstract: This study addresses whether an auditor change affects information asymmetry as measured by bid-ask spread. We adopt a panel data methodology over the period 2000-2006. Consistent with the hypothesis that auditor change is important to the capital markets, we find that the auditor switches have associated with a positive market reaction. Furthermore, the result supports the assumption that the market supposes auditor change to big reduces information asymmetry. The results could be of assistance to Tunisian investor, since they can rely on a higher assurance audit quality after auditor change.

Keywords: auditor change; bid-ask spread; big auditors; Tunisian Stock Exchange; Tunisia; information asymmetry; quality assurance; audit quality; capital markets; market reaction.

DOI: 10.1504/IJBCRM.2013.056333

International Journal of Business Continuity and Risk Management, 2013 Vol.4 No.2, pp.128 - 138

Received: 19 Nov 2012
Accepted: 10 Mar 2013
Published online: 31 Mar 2014 *

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