An analysis of the impact of litigation on issuing qualified opinions

Previous articles have studied the impact that the recent increase in litigation has had on Big Eight accounting firms and their policies and procedures. This paper examines litigations against a Big Six firm to determine if the litigation explosion has created higher audit quality which in tum has resulted in an increase in the issuance of qualified opinions. The evidence consists of a comparison in the number of qualified opinions issued by Big Six firm, Arthur Andersen & Company, before and after having been a defendant in several lawsuits in 1989. The tests indicate that there is no correlation between the Arthur Andersen & Company having been a defendant in several lawsuits and the number of qualified opinions rendered by the firm. This study offers some other factors which may be mitigating the influence the increased litigation has had on the issuance of qualified opinions.