The Advisory Committee on the Auditing Profession (ACAP [DoT 2008]), appointed by the U.S. Department of Treasury, recommended that regulators require public companies to have shareholder voting on auditor ratification. However, the SEC has sided with companies that sought to exclude proposals from shareholders seeking greater say in the auditor selection process. We use data from 12,664 shareholder votes on auditor ratification during 2011–2014 and find that subsequent auditor dismissals become more likely with increases in the proportion of shareholders not ratifying the auditor. The findings should be of interest to corporate governance activists and regulators, and reinforce suggestions that even small changes in shareholder votes can be associated with significant corporate changes.

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