A Review of the Archival Literature on Audit Partners

Lennox, Clive S.; Wu, Xi

doi:10.2308/acch-51942

Cited by 292 publications

(213 citation statements)

References 134 publications

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“…A recent boom in archival research on individual audit partners has been motivated by limitations with using an entire audit firm as the unit of analysis (Lennox and Wu ). Our paper contributes to this emerging literature by exploring whether an audit partner's cognitive ability (IQ) is related to audit quality.…”

Section: Discussionmentioning

confidence: 99%

IQ and Audit Quality: Do Smarter Auditors Deliver Better Audits?

Kallunki

Niemi

et al. 2019

Contemporary Accting Res

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This study examines the role of an individual auditor's cognitive ability in delivering high‐quality audits. Our results from analyzing archival data from Sweden show that audit partners' IQ scores obtained from psychological tests are positively associated with going‐concern audit reporting accuracy and audit fee premiums. We also find some, albeit weak, evidence that audit partners' IQ scores are negatively associated with the income‐increasing abnormal accruals of the client. These results suggest that, although audit services are standardized through various control mechanisms and audits are conducted by teams rather than by individual auditors, the cognitive ability of audit partners responsible for an audit remains important in delivering high‐quality audit services.

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Section: Discussionmentioning

confidence: 99%

IQ and Audit Quality: Do Smarter Auditors Deliver Better Audits?

Kallunki

Niemi

et al. 2019

Contemporary Accting Res

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“…DeFond and Zhang (2014) discuss it in the context of mandated audit firm rotation (e.g., Section 5.2.1.1). Lennox and Wu (2017) use the term when discussing papers that find results consistent with "fresh look" in the context of mandatory partner rotation. SEC Chairman Harvey Pitt (2002) appears to be one of the first to use the phrase in Senate testimony.…”

Section: Institutional Background and Economic Tradeoffs For Audit Qumentioning

confidence: 99%

On the Economics of Audit Partner Tenure and Rotation: Evidence from PCAOB Data

Gipper¹,

Hail²,

Leuz³

2018

SSRN Journal

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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.

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“…There exists a rich academic literature that investigates the various drivers that affect financial statement auditing and audit quality (for reviews, see DeFond and Zhang, 2014;Francis, 2004;Langli and Svanström, 2014;Lennox and Wu, 2017;and Vanstraelen and Schelleman, 2017). In this chapter, we will only zoom in on economic theories that relate to audit regulation and how regulation has developed.…”

Section: Introductionmentioning

confidence: 99%

Chapter 10: The Economics of Auditor Regulation

Langli¹,

Willekens²

2018

At the Forefront, Looking Ahead

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Financial statement auditing is useful as it provides assurance about the reliability of financial information that firms issue. To protect companies' stakeholders and to safeguard audit quality, financial statement auditing is heavily regulated. We explain why and when auditor regulation is necessary and warranted, and discuss important recent changes in auditor regulation, such as mandatory audit firm rotation in the EU. We also identify a number of auditing-related issues that require further deliberation.

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A Review of the Archival Literature on Audit Partners

Cited by 292 publications

References 134 publications

IQ and Audit Quality: Do Smarter Auditors Deliver Better Audits?

IQ and Audit Quality: Do Smarter Auditors Deliver Better Audits?

On the Economics of Audit Partner Tenure and Rotation: Evidence from PCAOB Data

Chapter 10: The Economics of Auditor Regulation

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