Auditors' Responses to Organized Labor in Client Firms

Simon Yu Kit FUNG, Woo Jong LEE, Bin SRINIDHI, Lixin Nancy SU

Research output: Journal PublicationsJournal Article (refereed)peer-review


Using a sample of US firms for the period 2000-2011, we examine whether organized labor in audit client firms affects auditor decisions such as audit fees and going-concern qualifications. We find that labor unionization is associated with higher audit fees and a higher likelihood of going-concern qualifications but shorter audit report lags, and the results on audit fees are stronger in the case of strikes. These results suggest that the presence of labor union(s) in a client firm constitutes a non-trivial risk element to auditors, which cannot be mitigated by additional audit effort.
Original languageEnglish
Pages (from-to)23-65
Number of pages43
JournalSeoul Journal of Business
Issue number2
Publication statusPublished - Dec 2017

Bibliographical note

We are grateful to Bok Baik (Editor), Mark DeFond, Ferdinand Gul, Sophia Hamm, Chul W. Park, Haina Shi, Dan Simunic, Jing Zhou, three anonymous reviewers, and workshop participants at EAA Annual Congress 2015, AAA Annual Meeting 2015, Korean Accounting Association International Conference 2015, University of Texas at Arlington, Shanghai University of Finance and Economics, Fudan University and University of Hong Kong for their helpful comments. Woo-Jong Lee appreciates financial support by the Institute of Management Research at Seoul National University.


  • AUDITING fees
  • BUSINESS enterprises
  • LABOR unions
  • STRIKES & lockouts
  • UNITED States
  • Audit fees
  • Audit report
  • Going-concern audit opinions
  • Labor union


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