Abstract
This study focuses on small- and medium-sized audit firms, who consider the problem of audit quality very important. Defining audit firms that have received the recommendation of administrative sanctions and/or other measures from the Certified Public Accountants and Auditing Oversight Board （CPAAOB） as lower-quality, this study investigates the relationship between the audit quality of audit firms and the clients’ business risk. Using return on assets （ROA）, O-score, and going concern （GC） for the proxy variables of the clients’ business risk, this study demonstrates that clients of audit firms with low audit quality tend to have high business risk.
