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Does Mandatory Rotation of Audit Partners Improve Audit Quality?

Lennox, Clive S. ; Wu, Xi ; Zhang, Tianyu

The Accounting review, 2014-09, Vol.89 (5), p.1775-1803 [Periódico revisado por pares]

Sarasota: American Accounting Association

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Título:
Does Mandatory Rotation of Audit Partners Improve Audit Quality?
Autor: Lennox, Clive S. ; Wu, Xi ; Zhang, Tianyu
Assuntos: Accounting ; Audit committees ; Audit engagements ; Auditing ; Auditor changes ; Audits ; Business audits ; Business entities ; China ; Control variables ; Financial analysis ; Financial audits ; Financial reporting ; Financial statements ; Impact analysis ; Job rotation ; Knowledge ; Management audits ; Quality ; Quality standards ; Studies ; Subsidiary companies ; Tenure
É parte de: The Accounting review, 2014-09, Vol.89 (5), p.1775-1803
Notas: ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
Descrição: Opponents of mandatory rotation argue that a change of partner is bad for audit quality, as it results in a loss of client-specific knowledge. On the other hand, proponents argue that a change of partner is beneficial, as it results in a positive peer review effect and a fresh perspective on the audit. We test the impact of mandatory partner rotation on audit quality using a unique dataset of audit adjustments in China. Our results suggest that mandatory rotation of engagement partners results in higher quality audits in the years immediately surrounding rotation. Specifically, we find a significantly higher frequency of audit adjustments during the departing partner's final year of tenure prior to mandatory rotation and during the incoming partner's first year of tenure following mandatory rotation.
Editor: Sarasota: American Accounting Association
Idioma: Inglês

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Does Mandatory Rotation of Audit Partners Improve Audit Quality?

Lennox, Clive S. ; Wu, Xi ; Zhang, Tianyu

Sarasota: American Accounting Association

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