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Author: Mao-Chang Wang
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
This study investigates the effects audit partner tenure and firm profitability on the market value of the firm. This study extends Ohlson's model by examining audit partner tenure, and the interaction between residual earnings per share and audit partner tenure on firm value. This issue is particularly important in light of regulations requiring audit partner rotation in the United States, Taiwan and other countries. The model is tested using large internationally listed companies in Taiwan. The findings on average do not support audit partner rotation in Taiwan.
Author: Mao-Chang Wang
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
This study investigates the effects audit partner tenure and firm profitability on the market value of the firm. This study extends Ohlson's model by examining audit partner tenure, and the interaction between residual earnings per share and audit partner tenure on firm value. This issue is particularly important in light of regulations requiring audit partner rotation in the United States, Taiwan and other countries. The model is tested using large internationally listed companies in Taiwan. The findings on average do not support audit partner rotation in Taiwan.
Author: Brandon Gipper
Publisher:
ISBN:
Category : Audited financial statements
Languages : en
Pages : 69
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Book Description
This paper provides the first partner tenure and rotation analysis for a large cross-section of U.S. publicly listed firms over an extended period. We analyze the effects on audit quality as well as economic tradeoffs related to partner tenure and rotation with respect to audit hours and fees. On average, we find no evidence for audit quality declines over the tenure cycle and little support for fresh-look benefits after rotations. Nevertheless, partner rotations have significant economic consequences. We find increases in audit fees and decreases in audit hours over the tenure cycle, which differ by partner experience, client size, and competitiveness of the local audit market. More generally, our findings are consistent with efforts by the audit firms to minimize disruptions and audit failures around mandatory rotations. We also analyze special circumstances, such as audit firm switches and early partner rotations, and show that they are more disruptive than mandatory rotations, and also more likely to exhibit audit quality effects.
Author: Neelam Poonawala
Publisher:
ISBN:
Category : Auditors
Languages : en
Pages : 146
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Author: Daniel Aobdia
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ISBN:
Category :
Languages : en
Pages : 53
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This paper examines whether the identity of the individual audit partners provides informational value to capital market participants beyond the value provided by the identity of the audit firms. Using data from Taiwan, where firms are mandated to disclose the names of the engagement partners, we find a positive association between the partner's quality and the client firm's earnings response coefficient. We also find a positive market reaction when a firm replaces a lower quality partner with a higher quality one. Moreover, we find evidence that firms audited by higher quality partners experience smaller Initial Public Offering (IPO) underpricing and are able to obtain better debt contract terms. Overall, these results suggest that the quality of engagement partners matters to capital market participants.
Author: Chun-sŏ Yi
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Author: Nancy Rueyhwa Mangold
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ISBN:
Category : Business & Economics
Languages : en
Pages : 184
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Author: Chih-Ying Chen
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ISBN:
Category :
Languages : en
Pages : 0
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Mandatory audit partner rotation has been adopted in certain countries while audit firm rotation is still being debated in many places. Most of the extant research on the relation between auditor tenure and earnings quality provides evidence at the audit firm level. However, since audit firm tenure is correlated with partner tenure and audit firm rotation is more costly than partner rotation, it is important to know whether earnings quality is related to audit firm tenure, partner tenure, or both. We investigate this issue using a sample of Taiwanese companies for which the audit report must be signed by two partners with their names disclosed in the report. Using performance adjusted discretionary accruals as a proxy for earnings quality, we find that the absolute and positive values of discretionary accruals decrease significantly with partner tenure. After controlling for partner tenure, we find that absolute discretionary accruals decrease significantly with audit firm tenure. Our findings are not consistent with the arguments that earnings quality decreases with extended audit partner tenure and that audit firm rotation in addition to partner rotation would improve earnings quality. Our results are robust to alternative ways of measuring partner tenure under the dual signature system. However, since the audit reports do not disclose which partner is responsible for maintaining the auditor-client relationship, measurement errors in partner tenure remain an issue that cannot be fully addressed in the context of our study.
Author: Padri Achyarsyah
Publisher:
ISBN:
Category :
Languages : en
Pages : 8
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Objective - The objective of this paper is to examine the effect of audit firm tenure and audit firm size on audit quality. This study applies explanatory research in which questionnaire and interviews serve as the primary data. The population of this study is public accounting firms which are registered in the Indonesian capital market.Methodology/Technique -The study presents a survey using professional auditors. Multiple regression method is used to conduct an hypothesis test of the effect of audit firm tenure and audit firm size on audit quality.Findings -The result of study depicted that audit firm tenure has no significant influence on the audit quality, while audit firm size has significant influence on the audit quality. Audit quality deteriorate, when the length of the audit firm client engagement is longer. No particular concern to audit firm size since big audit firm size has extensive training for their staffs and sufficient system in place.Novelty - The study contributes to auditing literature in the areas of audit quality. The length of the audit firm client relationship and audit firm size always rise the contradiction to the audit quality. The audit firm tenure and audit firm size support previous study, additional insight is gained toward in the elections of the audit firm that serves professional services in capital market.Type of Paper: Research paper.
Author: Jeff P. Boone
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Although investor perceptions of audit quality play a critical role in maintaining systemic confidence in the integrity of financial accounting reports (Levitt 2000), prior research on the effects of auditor tenure from an investor perspective is relatively sparse. In this study, we investigate whether investors price audit firm tenure for Big Five audits by examining the relation between tenure and the ex ante equity risk premium, i.e., the excess of the company-specific ex ante cost of equity capital over the risk-free interest rate. Based on prior research, whereas the quot;auditor learningquot; argument predicts that audit quality will change in only one direction (i.e., improve) with tenure, the quot;auditor-client closenessquot; argument suggests that audit quality may decrease beyond some (albeit unspecified) length of tenure due to impaired auditor independence and objectivity. Consistent with prior theoretical arguments, we find some evidence of a non-linear relation between audit firm tenure and the ex ante equity risk premium, i.e., we find that the equity risk premium decreases in the early years of tenure but increases with additional years of tenure. These findings persist after we control for well-known risk factors and company characteristics that have been shown in prior research to be related to the cost of equity capital. The implications of our findings are discussed.
Author: Khairul Mohd Kharuddin
Publisher:
ISBN:
Category :
Languages : en
Pages :
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