The sample used consists of 199 qualified financial statements and 4,403 unqualified ones, from 631 commercial banks[4] operating in nine Asian countries over the period 1995-2004. The sample is unbalanced in the sense that some of these banks received qualified opinions for more than one year, while others were not included in the sample for all years, due to missing information (either in terms of financial data or auditor’s opinion or both).