Archival research on audit partners: assessing the research field and recommendations for future research

Hardies, Kris; Hossain, Sarowar; Chapple, Larelle

doi:10.1111/acfi.12731

Cited by 21 publications

(16 citation statements)

References 91 publications

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“…A recent study by Hardies et al . (2020) argues that a limitation of many prior studies arises from the fact that audit partners and their clients are not randomly matched (i.e., simultaneity) (Gippel et al ., 2015). As a result, it remains unclear whether our reported results are driven by audit partner characteristics or by client characteristics.…”

Section: Resultsmentioning

confidence: 99%

“…Using a quasi-natural experiment of mandatory audit partner switches (Australian data), Hardies et al (2020) find evidence of increased (decreased) audit fees with changes of audit partner characteristics. However, they fail to find consistent evidence that audit quality is affected, indicating that mandatory audit partner rotation affects audit partner characteristics but has a limited effect on audit quality.…”

Section: Related Research and Hypothesis Developmentmentioning

confidence: 99%

“…We do not predict any direction for CLEVERAGE as the direction depends on the movement of leverage. Consistent with Hardies et al (2020), we include accounts receivables plus inventory divided total assets (ARINV) and return on assets (ROA), and expect a positive association with GC. Prior research supports the notion that auditor/partner expertise is associated with higher financial reporting quality and audit quality (Krishnan, 2003;Behn et al, 2008;Reichelt and Wang, 2010;Chi and Chin, 2011), and thus, we include both audit firm (AF_IS_SPC) 14 and partner (AP_IS_SPC) industry specialization.…”

Section: Empirical Modelsmentioning

confidence: 99%

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Client Importance and Audit Quality at the Individual Audit Partner, Office, and Firm Levels

Hossain

Coulton

Wang

2023

Abacus

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We investigate whether audit partner level data provides a more powerful measure than office or firm level measures of client importance. We find that the likelihood of issuing a going-concern opinion (any and first-time) increases, and the absolute value of discretionary accruals decreases, in relation to the proportion of audit fees to the total audit fees received by audit partners from all their clients. We also find that the likelihood of issuing a going-concern opinion (any and first-time) increases, and the absolute value of discretionary accruals decreases, in relation to the proportion of non-audit services fees from a client to total non-audit service fees, and the proportion of total audit and non-audit service fees from a client to total fees from all their clients at the office and firm levels. Our findings provide evidence to regulators, audit clients, and stakeholders that audit partners do not succumb to pressure from economically more important clients as audit quality has a positive association with client importance.

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Section: Resultsmentioning

confidence: 99%

Section: Related Research and Hypothesis Developmentmentioning

confidence: 99%

Section: Empirical Modelsmentioning

confidence: 99%

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Client Importance and Audit Quality at the Individual Audit Partner, Office, and Firm Levels

Hossain

Coulton

Wang

2023

Abacus

Self Cite

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“…Given the puzzling image on whether the audit partner’s portfolio size enhances or impedes the quality of the client firm’s accruals and because the limited evidence on whether busyness will prevent female audit partners from providing better quality audit services, we expect a nondirectional relation between the client firm’s earnings management and the female auditor’s portfolio size, measured accordingly to Hardies et al (2021a), as the sum of the female audit partner’s audited total assets in year (FAEP_ WORKLOAD ).…”

Section: Methodsmentioning

confidence: 99%

Female superiority in accruals quality: some evidence from the Scandinavian region

Mnif

Cherif²

2022

MEDAR

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Purpose The purpose of this paper is twofold. First, this study examines the relationship between the presence of a female (rather than a male) audit partner and the client firm’s accruals quality. Second, this study explores whether and how the female audit partners’ specific attributes influence the gendered auditor effect on the quality of the client firm’s accruals quality (if it exists). Design/methodology/approach Research hypotheses have been tested by conducting both univariate and multivariate empirical analyses based on a large sample of firm-year observations from the Swedish Corporation for the years 2010–2019. During the sample timeframe, the client firms have been audited by 56 female and 231 male audit partners. Findings The research findings first indicate that client firms of female audit partners are associated with downward earnings management, indicating a beneficial female auditor effect on client firm’s accruals quality. Results from the audit partner change analysis exhibit that the adverse female auditor effect on the client firm’s earnings management, and hence, the beneficial female auditor effect on the client firm’s accruals quality occurs from the first year of the assignment of a female audit partner to replace a male audit partner. When looking at how specific attributes of female audit partners influence accruals quality of their audited clients, this study reveals that the favorable female auditor effect on the client firm’s accruals quality holds constant for all the female audit partners’ specific attributes included in the researched models. This underscores that the mere presence of a female audit partner constrains earnings management and enhances, thereby, the client firm’s accruals quality. Originality/value This research supports regulators calling for the appointment of more women to the audit firms’ leading ranks (e.g. leadership).

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“…According to the Upper Echelons Theory, due to the complexity of the external environment, managers make their strategic decisions through their personal lens. Similarly, the auditor's professional expertise, knowledge, information processing ability, and other characteristics will also affect the auditing process and professional judgment [71], [72]. The auditor without professional expertise is less familiar with the technological patents and may rely more on the IP market evaluation to the firm.…”

Section: The Impact Of Auditor Industry Specialisationmentioning

confidence: 99%

Can Patent Quality Alleviates Information Asymmetry in Chinese Intellectual Property Market: Evidence From Auditing Field

Sun

2022

IEEE Access

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Due to the lack of professional knowledge, auditing innovation quality has always been a big problem for auditors. Patent citation is a new and informative signal. We hope this signal can help auditors reduce the lack of professional knowledge and reduce the audit input of innovation quality. By examining Chinese non-financial firms between 2011 and 2019, we use patent citation as the proxy of patent quality and find that firms with higher patent quality have lower audit input at the same level of R&D expenditure. Further tests show that the signaling effect of patent quality is limited. Patent quality signals will work when the audited firm is a high-tech enterprise, or when the Key Audit Matters (KAMs) involve items such as R&D expenditures. But the auditor industry specialization can replace the influence of patent quality. Our results imply that auditors can use patent quality as a signal to reduce the difficulty of obtaining information and risk evaluation. Firms should focus on the quality of patents and display their innovation capabilities through the intellectual property (IP) market. China should strengthen the protection of private rights and continuously enhance the supporting mechanism of IP market.

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Archival research on audit partners: assessing the research field and recommendations for future research

Cited by 21 publications

References 91 publications

Client Importance and Audit Quality at the Individual Audit Partner, Office, and Firm Levels

Client Importance and Audit Quality at the Individual Audit Partner, Office, and Firm Levels

Female superiority in accruals quality: some evidence from the Scandinavian region

Can Patent Quality Alleviates Information Asymmetry in Chinese Intellectual Property Market: Evidence From Auditing Field

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