Motivating factors in lawsuits against independent auditors: Experimental evidence on the importance of causality

Abstract

An explosion in auditors' litigation costs has led to debates regarding the behavior of litigants in lawsuits against independent auditors. One frequently voiced allegation is that plaintiff attorneys pursue cases which have little or no merit for the purpose of extracting settlements. A related issue, as yet unaddressed by empirical research, is the role of proximate cause in plaintiff attorneys' decisions to recommend third-party lawsuits against independent auditors for negligent misrepresentation. Our study examines the importance of proximate cause in plaintiff attorneys' preliminary assessments and recommendations regarding the initiation of litigation against auditors. Advanced law st..