Electronic Theses and Dissertations

Date of Award


Document Type


Degree Name

Ph.D. in Accountancy

First Advisor

Jeremy Griffin

Second Advisor

Rachna Prakash

Third Advisor

Morris Stocks


University of Mississippi

Relational Format



The auditor-client relationship begins during the client acceptance process. Before formal audit procedures occur, audit firms perform due diligence adding clients to their portfolio. Prior literature defines this due diligence phase as the auditor search period. Auditors utilize this time to increase the likelihood of a successful audit and continued relationship. The literature finds longer search periods are associated with higher engagement risks, which may be a precursor for more tumultuous relationships. However, I posit that auditors who spend more time, and thus expend more effort, engaged in this due diligence period will be more likely to identify and subsequently mitigate these engagement risks. I use the audit firm’s abnormal search period to proxy the constrained/unconstrained effort that auditors expend in the search period. Consistent with my prediction, I find that auditors who engage clients after extended due diligence are more likely to avoid a future restatement. However, I also find evidence that clients may not be appreciative of high effort auditors as clients are more likely to dismiss their auditor when auditors increase their due diligence.



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