Auditor Tenure and Audit Quality
Author | : Li Zheng Brooks |
Publisher | : |
Total Pages | : |
Release | : 2011 |
Genre | : |
ISBN | : |
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Author | : Li Zheng Brooks |
Publisher | : |
Total Pages | : |
Release | : 2011 |
Genre | : |
ISBN | : |
Author | : Chun-sŏ Yi |
Publisher | : |
Total Pages | : |
Release | : 2015 |
Genre | : |
ISBN | : |
Author | : Chee Yeow Lim |
Publisher | : |
Total Pages | : 42 |
Release | : 2015 |
Genre | : |
ISBN | : |
We investigate whether the relation between auditor tenure and audit quality is conditional on auditor specialization and fee dependence. Although prior studies have investigated the relation between extended auditor-client tenure and audit quality, none has examined how this relation is jointly influenced by both auditor specialization and fee dependence. Our main analyses, using accrual quality as a measure of audit quality, show that firms audited by specialists (vs. non-specialists) have relatively higher audit quality with extended auditor tenure, and that this relation is negatively moderated by auditors' fee dependence on clients. These results are robust to sensitivity tests, and alternative proxies for audit quality such as the issuance of going concern opinions and the market's response to quarterly earnings surprises.
Author | : Jonas Tritschler |
Publisher | : Springer Science & Business Media |
Total Pages | : 251 |
Release | : 2013-10-31 |
Genre | : Business & Economics |
ISBN | : 3658041749 |
Arising from the author’s experience as a practicing CPA, this book is quite different from other research in this field, as it confronts the subject of audit quality from a pragmatic perspective. The first goal of Jonas Tritschler is to develop an audit quality metric on national audit firm level. Financial reporting errors, as detected by the German enforcement institutions during examinations, which subsequently are published in the German Federal Gazette by the involved companies, are the data basis for this measurement. Using the developed audit quality metric, the second goal of this study is to analyze audit quality differences of selected audit firms by comparing their deployed audit input factors such as employee’s competence (ratio of certified professionals to total audit staff), experience of employees (average tenure of employees in years) and client-specific experience (client fluctuation rate). Results indicate a correlation between audit quality according to the developed metric and the operationalized audit input factors mentioned above.
Author | : Johanna Miettinen |
Publisher | : University of Vaasa |
Total Pages | : 169 |
Release | : 2008 |
Genre | : Audit committees |
ISBN | : 9524762447 |
Tiivistelmä: Tilintarkastuksen laadun vaikutus tarkastusvaliokunnan tehokkuuden ja taloudellisen tiedon laadun väliseen suhteeseen.
Author | : Junwei Peng |
Publisher | : |
Total Pages | : |
Release | : 2015 |
Genre | : |
ISBN | : |
After several major financial scandals, mandatory auditor rotation was raised as a measure to improve the auditor independence. For regulators who are to set mandatory rotation limit need detailed information about the turning points of the inverted U-shaped relationship between audit quality and auditor tenure, such as the statistical implication of a representative turning point of audit quality obtained by OLS estimation based on quadratic model or even the entire distribution of the sample firm-auditors' turning points. These two problems remain unsolved. This paper derived the statistical implication of the representative turning point of audit quality obtained by OLS estimation based on quadratic model. This paper also proposed an estimation method based on survival analysis to estimate the entire distribution curve for the turning points of all the sample firm-auditors in the form of their cumulative probability curve. Mote Carlo simulation was used to the performance of various estimation methods, such as accuracy, robustness, and information usefulness.
Author | : Anushka Shrestha |
Publisher | : |
Total Pages | : 56 |
Release | : 2021 |
Genre | : |
ISBN | : |
Author | : Ce Wen |
Publisher | : |
Total Pages | : 55 |
Release | : 2018 |
Genre | : |
ISBN | : |
Prior studies find that long auditor tenure improves audit quality. An alternative explanation, however, is that low audit quality increases auditor turnover, thereby self-selecting into the short-tenure group. To disentangle these explanations, this paper examines selection bias in audit firm tenure research in three steps. First, we empirically demonstrate the existence of self-selection. We find that the length (or duration) of the auditor-client relationship is not random: firms that have higher audit quality, higher profitability, and lower risk are more likely to have long relationships with their auditors. Second, we use simulated panel data to illustrate that, when self-selection exists, results consistent with long tenure improving audit quality may be obtained, even if lengthened tenure has no impact or even an adverse impact on audit quality. We show that incorporating fixed effects is critical to address the selection bias. Third, we examine commonly used audit-quality proxies and find that, after controlling for selection bias, there is little evidence that auditor tenure affects audit quality or perceived audit quality. Our results suggest that the previously documented positive association between auditor tenure and audit quality reflects selection bias, instead of a treatment effect.
Author | : Wei Quan |
Publisher | : |
Total Pages | : 220 |
Release | : 2007 |
Genre | : Auditing |
ISBN | : |
The objective of this thesis is to examine whether the length of the auditor-client relationship (audit tenure) is associated with reduced auditor independence, particularly in terms of auditors permitting excessive earnings management by their clients.
Author | : Zvi Singer |
Publisher | : |
Total Pages | : |
Release | : 2017 |
Genre | : |
ISBN | : |
Using the timeliness of misstatement discovery as a proxy for audit quality, we examine the association between audit firm tenure and audit quality in a setting that alleviates the endogeneity problem endemic to this line of research. We find that longer audit firm tenure leads to less timely discovery and correction of misstatements, which is consistent with a negative effect of long auditor tenure on audit quality. In addition, using the non-voluntary auditor change following the demise of Arthur Andersen in 2002 as a natural experiment, we show that the misstatements of its former clients were discovered faster than those of comparable companies that retained their auditors throughout the misstatement. This finding speaks to the benefit of a fresh look by a new auditor. An extended analysis shows that longer auditor tenure also leads to misstatements of greater magnitudes, and that the Sarbanes-Oxley Act has mitigated, but not eliminated, the negative effect of long auditor tenure. Lastly, we show that the negative association between auditor tenure and timely discovery of misstatements is mainly present in the first ten years of an audit engagement. Our study has implications for regulators who continue to express concern regarding lengthy auditor-client engagement.