The results indicate that Asian banks that receive qualified opinions are in general smaller ones, less well capitalized, less profitable and cost efficient, and appear to have excess liquidity. More external auditing requirements and less accounting and disclosure requirements in the banking sector, also increase the probability of receiving a qualified audit opinion. Knowledge of these characteristics can be of particular interest to bank’s managers, investors, credit analysts and bank supervisors. The latter rely heavily on external auditors as they access the financial performance of banks