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The Effects Of Firm Market Value On Audit Partner Tenure And Firm Profitability
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Book Synopsis The Effects of Firm Market Value on Audit Partner Tenure and Firm Profitability by : Mao-Chang Wang
Download or read book The Effects of Firm Market Value on Audit Partner Tenure and Firm Profitability written by Mao-Chang Wang and published by . This book was released on 2010 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Book Synopsis On the Economics of Audit Partner Tenure and Rotation by : Brandon Gipper
Download or read book On the Economics of Audit Partner Tenure and Rotation written by Brandon Gipper and published by . This book was released on 2017 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Book Synopsis The Effect of Long Audit Firm Tenure on Financial Statement Quality when Managers Have an Incentive and Ability to Manipulate Earnings by : Neelam Poonawala
Download or read book The Effect of Long Audit Firm Tenure on Financial Statement Quality when Managers Have an Incentive and Ability to Manipulate Earnings written by Neelam Poonawala and published by . This book was released on 2008 with total page 146 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Capital Market Consequences of Audit Partner Quality by : Daniel Aobdia
Download or read book Capital Market Consequences of Audit Partner Quality written by Daniel Aobdia and published by . This book was released on 2015 with total page 53 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Download or read book Audit Quality written by Jonas Tritschler and published by Springer Science & Business Media. This book was released on 2013-10-31 with total page 251 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Book Synopsis Auditor Tenure and Audit Quality by : Chun-sŏ Yi
Download or read book Auditor Tenure and Audit Quality written by Chun-sŏ Yi and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Changing Auditors and the Effect on Earnings, Auditors' Opinions, and Stock Prices by : Nancy Rueyhwa Mangold
Download or read book Changing Auditors and the Effect on Earnings, Auditors' Opinions, and Stock Prices written by Nancy Rueyhwa Mangold and published by . This book was released on 1988 with total page 184 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Audit Partner Tenure, Audit Firm Tenure, and Discretionary Accruals by : Chih-Ying Chen
Download or read book Audit Partner Tenure, Audit Firm Tenure, and Discretionary Accruals written by Chih-Ying Chen and published by . This book was released on 2013 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Book Synopsis Audit Firm Tenure, Audit Firm Size and Audit Quality by : Padri Achyarsyah
Download or read book Audit Firm Tenure, Audit Firm Size and Audit Quality written by Padri Achyarsyah and published by . This book was released on 2017 with total page 8 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Book Synopsis Audit Firm Tenure and the Equity Risk Premium by : Jeff P. Boone
Download or read book Audit Firm Tenure and the Equity Risk Premium written by Jeff P. Boone and published by . This book was released on 2010 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Book Synopsis The Effects of Audit Firm and Partner Industry Specialisation and Corporate Governance on Audit Quality and Earnings Quality by : Khairul Mohd Kharuddin
Download or read book The Effects of Audit Firm and Partner Industry Specialisation and Corporate Governance on Audit Quality and Earnings Quality written by Khairul Mohd Kharuddin and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Regulation and the Accounting Profession by : John W. Buckley
Download or read book Regulation and the Accounting Profession written by John W. Buckley and published by Belmont, Calif. : Lifetime Learning Publications. This book was released on 1980 with total page 266 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Audit Pricing, Accruals and Firm Value by : Jun Zhan
Download or read book Audit Pricing, Accruals and Firm Value written by Jun Zhan and published by . This book was released on 2012 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Audit Partner Tenure and Internal Control Reporting Quality by : Brian Fitzgerald
Download or read book Audit Partner Tenure and Internal Control Reporting Quality written by Brian Fitzgerald and published by . This book was released on 2017 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines the effects of audit partner tenure and audit partner changes on internal control reporting quality for large U.S. not-for-profit (NFP) organizations. Regulators contend that audit partners lose their objectivity over successive audits, reducing audit quality. A large body of research has examined this issue, primarily in non-U.S. jurisdictions, with mixed results. We examine the associations between audit partner tenure and audit partner changes and the incidence of reported internal control deficiencies (ICDs), the quality of internal control reports (following PCAOB audit quality indicators), and the severity of reported ICDs. We find negative associations between audit partner tenure and the incidence of reported ICDs, the quality of internal control reports, and the severity of reported ICDs. Together, these findings indicate that internal control reporting quality deteriorates with audit partner tenure. However, we find no association between audit partner changes and internal control reporting, which is consistent with partners lacking client specific knowledge in their first year with a client. Finally, we find no association between either audit partner tenure or changes and the likelihood of remediation. Our findings contribute large-sample U.S. evidence on the association between audit partner tenure and internal control reporting quality and provide useful information to government regulators, NFP boards charged with the oversight of the external auditor and internal controls, and NFP stakeholders.
Book Synopsis Audit Firm and Audit Partner Effects: Evidence from Auditees that Switch Audit Firms and Audit Partners by : Koen de Bruijn
Download or read book Audit Firm and Audit Partner Effects: Evidence from Auditees that Switch Audit Firms and Audit Partners written by Koen de Bruijn and published by . This book was released on 2017 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Recent studies provide evidence that switching, of either audit firm or audit partner, decreases the audit fee. Audit fees are important for auditees that switch firms, and partners with shorter audit tenure have lower realization rates. This paper investigates the impact a switch of audit firm or audit partner has on the audit fee paid by the auditee and what type of switch has more impact. Using Belgian archival data, I analyzed 62.695 firm-year observations between 2008 and 2011. The analyses performed show that audit fees are significantly lower immediately after a switch of audit partner or audit firm, in general and in a ceteris paribus condition. The results show that in general and in a ceteris paribus condition, a switch of audit fees decrease more after a switch in audit firm.
Book Synopsis Audit Committee Tenure, Earnings Quality, Firm Performance and Cost of Capital by : James M. Braswell
Download or read book Audit Committee Tenure, Earnings Quality, Firm Performance and Cost of Capital written by James M. Braswell and published by . This book was released on 2007 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Regulators and financial reporting institutions have recently increased their focus on audit committee composition, indicating an acknowledgement of the potential importance of audit committee monitoring efforts on financial reporting quality. I extend prior corporate governance research by exploring whether the duration of service on a specific audit committee (i.e., audit committee tenure) affects earnings quality, future financial performance and cost of capital. Using a sample of 2,355 firm years for fiscal years 1998-2003, I test the potential association between audit committee tenure and GAAP-based earnings quality proxies and find some evidence that audit committee tenure improves earnings quality by limiting the degree to which management relies on accruals to determine income. I also test whether audit committee tenure effectively reduces real earnings management proxies since such techniques reflect routine business decisions that often fall outside of GAAP's jurisdiction. I find that audit committee tenure is associated with the use of abnormally low discretionary expenses, suggesting that current-period earnings are artificially inflated when audit committee tenure is relatively longer. The next stage of my study examines the effect of audit committee tenure on firm performance. Audit committees can influence firm performance by two avenues. First, committee effectiveness can influence the quality of reported earnings, which could reduce the cost of capital and improve firm performance by making positive NPV projects more feasible. The audit committee also oversees risk management activities and internal reporting efforts that are ultimately used by the board of directors to monitor and ratify management's strategic decisions. The results of this analysis provide evidence consistent with the entrenchment hypotheses since audit committee tenure appears to have a negative effect on future firm performance. I conclude the study by analyzing the potential association between audit committee tenure and cost of capital. After employing both cost of equity and cost of debt proxies as dependent variables, I find no significant associations with audit committee tenure.
Book Synopsis Does the Audit Market Price Partner Big 4 Experience in Non-Big 4 Firms? by : Aleksandra B Zimmerman
Download or read book Does the Audit Market Price Partner Big 4 Experience in Non-Big 4 Firms? written by Aleksandra B Zimmerman and published by . This book was released on 2016 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines the impact of audit partner Big 4 experience on audit pricing in the U.S. Prior research has only examined the nature of a Big 4 auditor reputation at the firm-level. This study extends our understanding of the impact of auditor experience at the partner level by investigating whether non-Big 4 firms, both at the partner and at the office level, charge higher audit fees for the prior Big 4 experience of their audit partners. Signaling theory suggests that an individual auditor's Big 4 experience, by virtue of signaling higher quality, allows the auditor to command higher audit fees even in a non-Big 4 firm. Moreover, the more partners with Big 4 experience in a non-Big 4 firm office, the higher the office's human capital and the more visible the Big 4 reputational signal, and the higher the audit fees. Results are consistent with expectations and indicate that there is an average audit fee premium of approximately 27 percent for partners with any Big 4 experience. Moreover, there is an average increase in audit fees of approximately 0.14 percent for each 1 percent increase in the proportion of an office's partners with Big 4 experience. This suggests that non-Big 4 firm offices benefit from the collective Big 4 reputation of their audit partners. The study provides evidence that a Big 4 reputation is not just a phenomenon particular to Big 4 firms themselves. A Big 4 reputation is not lost at the individual level when auditors leave the Big 4 and transfer to non-Big 4 firms. Rather, it continues to be perceived as valuable and priced as such into audit engagements as a whole by the audit market. The study also contributes to the literature on the impact of partner experience and audit outcomes by using a unique hand-collected dataset on U.S. audit partners and a new operationalization of audit partner experience. Modeling of audit fees is no longer complete without the inclusion of audit partner characteristics.
