Estimating The Effect Of Auditor Tenure On Audit Quality PDF Download
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| Author | : Junwei Peng |
| Publisher | : |
| Total Pages | : |
| Release | : 2015 |
| Genre | : |
| ISBN | : |
Download Estimating the Effect of Auditor Tenure on Audit Quality Book in PDF, ePub and Kindle
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 | : Li Zheng Brooks |
| Publisher | : |
| Total Pages | : 0 |
| Release | : 2011 |
| Genre | : |
| ISBN | : |
Download When Does Audit Quality Start to Decline in Firm Audit Tenure? - An International Analysis Book in PDF, ePub and Kindle
This paper investigates the decline in audit quality during an audit firm's tenure across countries with varying degrees of legal liability. We propose that audit quality can increase through a learning effect in early years but in later years it is likely to decrease due to a bonding effect. Using a quadratic model, we estimate the year when audit quality, measured by earnings quality, starts to decline during an audit firm's tenure. We propose that the bonding effect should be weaker in countries with stricter legal liability regimes, which implies that the year that audit quality begins to decline should be later in countries with stricter legal liability regimes. We find that it takes 14 to 16 years for countries with stronger legal liability regimes while it only takes 4 to 10 years for countries with weaker legal liability regimes for audit quality to decline. Our results are strong regardless of whether we measure legal liability from the perspective of legal origin (common or code law) or litigation risk. Our findings have implications across the world for the current debate on the mandatory requirement of audit firm rotation across the world.
| Author | : David Hay |
| Publisher | : Routledge |
| Total Pages | : 387 |
| Release | : 2014-09-15 |
| Genre | : Business & Economics |
| ISBN | : 1136210350 |
Download The Routledge Companion to Auditing Book in PDF, ePub and Kindle
Auditing has been a subject of some controversy, and there have been repeated attempts at reforming its practice globally. This comprehensive companion surveys the state of the discipline, including emerging and cutting-edge trends. It covers the most important and controversial issues, including auditing ethics, auditor independence, social and environmental accounting as well as the future of the field. This handbook is vital reading for legislators, regulators, professionals, commentators, students and researchers involved with auditing and accounting. The collection will also prove an ideal starting place for researchers from other fields looking to break into this vital subject.
| Author | : Jennifer J. Gaver |
| Publisher | : |
| Total Pages | : |
| Release | : 2019 |
| Genre | : |
| ISBN | : |
Download Audit Quality and Specialist Tenure Book in PDF, ePub and Kindle
We argue that the association between auditor industry specialization and audit quality depends on how long the auditor has been a specialist. We measure audit quality using absolute discretionary accruals, income-increasing discretionary accruals, and book-tax differences. Our results, based on a sample of Big 4 audit clients from 2003-2015, indicate that auditors who have only recently gained the specialist designation produce a level of audit quality that does not surpass that produced by non-specialist auditors, and is generally lower than the audit quality produced by seasoned specialists. We estimate that the seasoning process takes two to three years. In contrast to prior research that finds no effect of specialization after propensity score matching, we find that seasoned specialists generally produce higher quality audits than other auditors even after matching. This suggests that the audit quality effect associated with seasoned industry specialist auditors is not due to differences in client characteristics.
| Author | : John W. Buckley |
| Publisher | : Belmont, Calif. : Lifetime Learning Publications |
| Total Pages | : 266 |
| Release | : 1980 |
| Genre | : Accounting |
| ISBN | : |
Download Regulation and the Accounting Profession Book in PDF, ePub and Kindle
| Author | : United States. Congress. Senate. Committee on Government Operations. Subcommittee on Reports, Accounting, and Management |
| Publisher | : |
| Total Pages | : 28 |
| Release | : 1976 |
| Genre | : Accountants |
| ISBN | : |
Download Summary of the Accounting Establishment Book in PDF, ePub and Kindle
| Author | : Chee Yeow Lim |
| Publisher | : |
| Total Pages | : 42 |
| Release | : 2015 |
| Genre | : |
| ISBN | : |
Download Does Auditor Tenure Improve Audit Quality? Moderating Effects of Industry Specialization and Fee Dependence Book in PDF, ePub and Kindle
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 | : Baolei Qi |
| Publisher | : |
| Total Pages | : 47 |
| Release | : 2017 |
| Genre | : |
| ISBN | : |
Download Estimation and Interpretation of Individual Auditor's Effects on Audit Quality Measures Book in PDF, ePub and Kindle
This study examines the validity of conclusions on individual auditor quality obtained using four audit measures with the archival data from China. We argue that for an audit quality measure to effectively identify an auditor's quality, two conditions must be satisfied: The measure is directly linked to the quality of information audited by the auditor and the measured auditor effect is indeed caused by the auditor. We posit that the conclusion on an auditor's quality based on an audit quality measure may not be reliable if these two conditions are not satisfied. We then provide empirical evidence that the audit quality estimation models in the extant literature do not provide coherent identifications of individual auditor's quality. Our results imply that some or all of these models may not be well specified to measure auditor quality, suggesting improvements on these models are required. The empirical results in this paper also suggest that researchers need to exercise caution in interpreting the estimation results of the auditor quality from these existing models in the literature.
| Author | : Ce Wen |
| Publisher | : |
| Total Pages | : 55 |
| Release | : 2018 |
| Genre | : |
| ISBN | : |
Download Selection Bias in Audit Firm Tenure Research Book in PDF, ePub and Kindle
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 | : Christopher Bleibtreu |
| Publisher | : |
| Total Pages | : 200 |
| Release | : 2021-11-24 |
| Genre | : |
| ISBN | : 9781680839005 |
Download Audit Regulations, Audit Market Structure, and Financial Reporting Quality Book in PDF, ePub and Kindle
Audit Regulations, Audit Market Structure, and Financial Reporting Quality provides a structured overview of the empirical and analytical literature on the effects of audit market regulations. After a short introduction, the monograph is organized as follows. Chapter II addresses the structure of the audit markets of industrialized countries. First presenting an overview of the concentration metrics used to describe the structure of an audit market or a market segment, then providing the empirical findings on audit market concentration at the national level and presenting an overview of the main reasons that led to the currently high degree of concentration. Chapter III summarizes the reasons why regulators worldwide consider a high degree of concentration to be a concern. In particular, it reviews the regulator's assumption that a high degree of concentration inevitably leads to a low degree of competition and to the corresponding effects of low audit quality and high audit fees. It also provides an overview of the empirical findings on the association between concentration and audit quality and fees, respectively. Chapter IV introduces the mandatory audit firm rotation, the prohibition on the joint supply of audit and non-audit services, and joint audits as examples for regulations that are likely to have both incentive and market structure effects. Chapter V summarizes the empirical findings on the effects of these regulations on audit quality and market structure. Chapter VI summarizes models that regard the market structure as given. The results from these models show that the effects of regulations are not straightforward, but depend on various factors related to the auditor, the client, and the legal environment. Chapter VII gives an overview of analytical research that simultaneously considers incentive effects and market structure effects. It also provides a brief overview of industrial organization models that seem suitable to expand the models applied to investigate the effects of audit regulations. Chapter VIII concludes and highlights avenues for future research.
