Hypothesis and Consequences of Auditor Switch

Recent times, that because of some financial scandals such as Enron Company’s accounting scandal, World com and others, auditors’ independence is questioned, as one of the strategies to reinforce the auditors’ independence regulatory institutions of accounting profession and capital market have advised and implemented the auditors’ switch. In this study the auditor’s economic dependence and maintaining the reputation hypothesis are explained from theoretical and empirical vantage point and different kinds of arbitrary and mandatory auditor switch are classified firstly. Then the effects of auditor switch on the audit costs, company’s operation, audit quality and auditor’s independence is analyzed separately. By studying the literature in this case can conclude that the consequence of auditor switch depends on the causes of switch and managers’ and auditors’ motives