Discretionary Accruals, Audit-Firm Tenure and Audit-Partner Tenure: Empirical Evidence from Taiwan

Chi, Wuchun; Huang, Huichi

doi:10.1016/s1815-5669(10)70003-5

Cited by 137 publications

(113 citation statements)

References 37 publications

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“…Concurrently, we test the association between audit tenure and audit quality. Numerous studies find audit quality increases with audit tenure (Myers et al, 2003;Chi & Huang, 2005;Chi et al, 2009). Our results suggest that longer audit tenure has a positive effect on audit quality, consistent with previous findings.…”

Section: Introductionsupporting

confidence: 92%

Mandatory Audit Firm Rotation and Big4 Effect on Audit Quality: Evidence from South Korea

Choi¹,

Lim²,

Mali³

2017

AAMJAF

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Section: Introductionsupporting

confidence: 92%

Mandatory Audit Firm Rotation and Big4 Effect on Audit Quality: Evidence from South Korea

Choi¹,

Lim²,

Mali³

2017

AAMJAF

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“…However, our finding reveals that if a client never changes its auditor since listed in stock exchange, then the possibility of receiving clean opinion is higher. These results support Chi and Huang (2004) who suggested that familiarity effect produce higher earnings quality, but excessive familiarity results in lower earnings quality (even the situation are difference between this study and Chi & Huang, 2004, similar proxy of audit firm tenure was used by both studies to examine the role of audit firm whether in going concern opinion or earning aspect).…”

Section: Multivariate Regressionsupporting

confidence: 79%

“…Recently, Geiger and Raghunandan (2002) studied a sample of 117 bankrupt companies and suggested that auditors may be more influenced by their newly obtained clients in the earlier years of the engagement. In addition, Chi and Huang (2004) found that audit firm tenure helps to produce higher earnings quality due to familiarity effect, but excessive familiarity results in lower earnings quality. Furthermore, they found that audit firm tenure plays a key role in the transmission of learning experience.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Audit Firm Tenure and Auditor Reporting Quality: Evidence in Malaysia

Shafie¹,

Hussin²,

Yusof³

et al. 2009

IBR

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The main purpose of the study is to examine the relationship between audit firm tenure and auditor reporting quality in Malaysia. This study employs well-established going concern model of logistic regression. Our findings show that audit firm tenure is positively significant relationship with auditor reporting quality. Future research should consider other importance variables that may affect the auditor reporting quality such as non-audit services, and audit partner tenure. However, in sum, this study is in line with the recent decision by the regulators not to regulate a mandatory audit firm rotation in Malaysia. This study provides a very importance implication and as a cornerstone to the regulators and policy makers in a developing country as the issue continues to be strong interest among them in improving the auditor independence.

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“…Boone et al (2008) have argued that client-specific knowledge is crucial to building a sufficient level of familiarity with the client's accounting system. Similarly, Chi and Huang (2004) observed a "learning effect" and reported that the ability to investigate accounting irregularities is a function of audit tenure. Myers et al (2003) found that auditor tenure is positively related to earnings quality using discretionary accruals as a proxy for earnings quality.…”

Section: Reported Earnings and Measures Of Audit Qualitymentioning

confidence: 95%

“…Some studies found evidence of lower audit quality in the early years of the auditor-client relationship, with audit quality improving as audit tenure lengthens (Beck & Soloman, 1988;Geiger & Raghunandan, 2002;Carcello & Nagy, 2004;Chi & Huang, 2004;Boone et al, 2008). Other studies found that audit firm tenure affects audit quality adversely (Hoyle, 1978;Davis et al, 2009;Al-Thuneibat et al, 2011).…”

Section: Introductionmentioning

confidence: 99%

The Effect of Client Importance and Auditor Tenure on Accounting Conservatism: Evidence from Chinese Companies

Yu¹,

Lenard²

2012

IBR

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The concern over accounting regulation has resulted in studies of auditor independence and audit quality, as measured by auditor tenure, accounting conservatism, and the type of audit firm the client employs (Big 4 or non-Big 4).In this study, we continue the line of research on conservatism and auditor tenure by examining whether accounting conservatism is related to auditor tenure for Chinese firms. We extend the studies by Jenkins and Velury (2008) and Li (2010) in order to examine Chinese firms that have non-Big 4 auditors, and we investigate whether the association exists for the most important and least important clients of these audit firms. Our findings indicate that least important clients employ more conservative accounting techniques as auditor tenure increases. For the most important clients, there is less conservatism, compared to the least important clients, in the early years of the auditor's tenure. Our study provides more information about the regulatory issue of mandatory audit firm rotation because our results suggest that mandatory auditor rotation may have an adverse effect on the least important clients of these Chinese audit firms.

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Discretionary Accruals, Audit-Firm Tenure and Audit-Partner Tenure: Empirical Evidence from Taiwan

Cited by 137 publications

References 37 publications

Mandatory Audit Firm Rotation and Big4 Effect on Audit Quality: Evidence from South Korea

Mandatory Audit Firm Rotation and Big4 Effect on Audit Quality: Evidence from South Korea

Audit Firm Tenure and Auditor Reporting Quality: Evidence in Malaysia

The Effect of Client Importance and Auditor Tenure on Accounting Conservatism: Evidence from Chinese Companies

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