Audit Firm Employee Turnover and Audit Quality

Linden, Christophe Van; Vandenhaute, Marie-Laure; Zimmerman, Ally

doi:10.2139/ssrn.3775116

Cited by 6 publications

(6 citation statements)

References 80 publications

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“…Finally, our results enrich the literature related to the audit labour market (Chi et al, 2019;Ege et al, 2023;Hennes et al, 2014;Linden et al, 2021;Lee et al, 2022;Nagy et al, 2023). Such studies mainly focus on the consequence of an audit firm's human resources, especially on audit quality.…”

Section: Introductionsupporting

confidence: 61%

“…An emerging body of literature explores the dynamics in the audit labour market and the associated consequences for audit performance, mainly with respect to audit firm human resources (Ege et al, 2023;Lee et al, 2022;Linden et al, 2021;Nagy et al, 2023). In this paper, we investigate the incentives of individual auditors in the audit labour market.…”

Section: Introductionmentioning

confidence: 99%

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Does audit quality affect auditors’ career development? Evidence from Chinese audit firms’ demise

Chen,

Feng,

Kou

et al. 2024

MAJ

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Purpose This study aims to test the effect of individual audit quality on career advancement the audit labour market. Design/methodology/approach This paper uses data on auditors from two collapsed audit firms in China, namely, Ruihua and Zhengzhong Zhujiang, and tests the effect of individual audit quality on career advancement in the audit labour market. Findings The baseline results show that high-quality audits promote auditors’ career advancement. Our results hold after a battery of robustness tests. Further analyses support our hypothesis, indicating that client retention and audit fees are positively related to auditors’ prior audit quality. The effect of audit quality on career advancement does not hold for auditors from sanctioned branch offices or for auditors with prior culpable clients, as shared reputation damage can weaken the effect of high audit quality. Furthermore, this paper investigates whether the reputation enhancement effect of high audit quality can be strengthened by auditor experience, the title of “senior auditor” and IPO auditing experience. We also show that clients and audit firms place more weight on the quality of audits conducted by auditors in competitive markets and auditors with engagements matched with industries. Originality/value Together, these findings indicate the vital role of individual audit quality in auditors’ career development in the audit labour market, consistent with the reputation rationale for audit quality.

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Section: Introductionsupporting

confidence: 61%

Section: Introductionmentioning

confidence: 99%

Does audit quality affect auditors’ career development? Evidence from Chinese audit firms’ demise

Chen,

Feng,

Kou

et al. 2024

MAJ

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“…If office audit partner diversity positively influences retention, greater retention can minimize disruptions to engagement teams and help maintain institutional and client‐specific knowledge. Prior research finds that greater year‐over‐year audit engagement team staffing continuity is associated with improved audit quality, efficiency, and profitability (Christensen et al, 2021; van Linden et al, 2021).…”

Section: Motivation Interviews and Hypothesis Developmentmentioning

confidence: 99%

“…These findings have managerial implications for audit office efforts to promote diversity as they suggest there is economic value in office‐level efforts to promote diversity. Given evidence of the negative repercussions that turnover can have on audit quality (Christensen et al, 2021; FRC, 2021; van Linden et al, 2021) and the role that leaders play in setting the tone and organizational climate within audit firms (Center for Audit Quality [CAQ], 2010; COSO, 2013; International Federation of Accountants [IFA], 2007; PCAOB, 2015), these findings should be of interest to accounting firms and regulators responsible for overseeing and promoting audit quality.…”

Section: Introductionmentioning

confidence: 99%

Does gender and ethnic diversity among audit partners influence office‐level audit personnel retention and audit quality?

Condie

Lisic

Seidel

et al. 2023

Contemporary Accting Res

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Motivated by prior literature on organizational identification and 23 semistructured interviews with a variety of US audit partners and directors, we examine whether the gender and ethnic diversity of an office's audit partners influences the retention of the office's audit professionals and the quality of the audits conducted by the office. Using hand‐collected data on US audit partners, we find that greater levels of (or changes in) diversity in office audit partners' gender and ethnicity are associated with lower (reduced) turnover among office audit professionals and higher (increased) office‐level audit quality. We conduct a path analysis based on the most common mechanisms highlighted in our interviews to provide further insight into the audit quality results. The results indicate partial mediation through increased retention, greater gender and ethnic diversity among office audit personnel, client continuity, and increased efficiency. Further tests reveal that the association with audit quality is incremental to, and distinct from, the effect of individual engagement partner characteristics and does not reflect client screening. The findings underscore the importance of gender and ethnic diversity among office audit partners to organizational outcomes and provide important practical implications for audit firms.

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“…In an accountancy firm setting, one of the challenges is the high turnover [20], not only for preserving healthy human relations in the organization, but also for attracting talent that fuels the business model and avoiding the negative impact on the work quality [21]. In addition, stressors influence the intention to leave the organization [9,[22][23][24][25] and constitute negative publicity for the profession.…”

Section: Introductionmentioning

confidence: 99%

Accountancy as a Meaningful Work. Main Determinants from a Job Quality and Optimization Algorithm Approach

et al. 2021

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The primary purpose of the accounting profession is to provide quality information to the market that facilitates the allocation of resources. The context in which it operates must attend to some stressors that can affect the professional’s meaning of the work. Meaningful work (MW) is based on the concept of valuable work and work well done, so it is directly related to the concept of quality at work, which is a constant concern in the accounting profession. The method used to determine meaningful work identifies the set of job quality indexes, as defined by the European Working Conditions Survey (EWCS), related to the MW. This paper has used an integer programming genetic algorithm (GA) to determine the JQIs and the statistically significant combinations. The findings showed that JQIs, skills development and discretion (SD), and physical environment (PE) positively and intensely relate to MW. Likewise, reduction of the work intensity (WI) and improvement of the social environment (SE) are related in the same direction as the MW. On the other hand, the results showed different indicator weightings depending on the age of the accountants. This paper shows the importance that accountants attribute to professional competence and how, throughout their careers, the JQI that most relate to MW is changing, from a social vision to preferences where the care of personal time also prevails.

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Audit Firm Employee Turnover and Audit Quality

Cited by 6 publications

References 80 publications

Does audit quality affect auditors’ career development? Evidence from Chinese audit firms’ demise

Does audit quality affect auditors’ career development? Evidence from Chinese audit firms’ demise

Does gender and ethnic diversity among audit partners influence office‐level audit personnel retention and audit quality?

Accountancy as a Meaningful Work. Main Determinants from a Job Quality and Optimization Algorithm Approach

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