Consequences of the Abandonment of Mandatory Joint Audit: An Empirical Study of Audit Costs and Audit Quality Effects

Lesage, Cédric; Ratzinger‐Sakel, Nicole V.S.; Kettunen, Jari

doi:10.1080/09638180.2016.1152558

Cited by 55 publications

(80 citation statements)

References 34 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…To test the article's hypotheses, two models adapted from Lesage, Ratzinger-Sakel, and Kettunen (2017), who also investigate a determinant of audit quality and audit fees in a European setting, are estimated. Model 1 tests the potential impact of the presence of AFA on a company's AC on audit quality, while Model 2 is used to capture potential effects concerning audit fees.…”

Section: Methodsmentioning

confidence: 99%

“…As prior research has demonstrated that a client's financial situation and profitability are negatively associated with audit fees (e.g., Pratt & Stice, 1994), we add several measures of financial condition (Loss t , Leverage, ROA, and LQD) to our model. Following Lesage et al (2017), we further control for several capital marketrelated aspects (Index, Cross-listing, BTM, and Issuance). In particular, companies that have a cross-listing (e.g., Choi, Kim, Liu, & Simunic, 2009), are listed on a prime stock index (e.g., Krauß, Pronobis, & Zülch, 2015), and issue equity (e.g., Bédard & Courteau, 2015) are likely to pay higher audit fees.…”

Section: Company Characteristicsmentioning

confidence: 99%

“…To account for the potential impact that company characteristics might have on audit quality and audit fees, we include the companyspecific control variables that have been used by Lesage et al (2017) and proposed by other scholars (e.g., DeFond & Zhang, 2014;Hay et al, 2006) in Models 1 and 2. In doing so, we include a variable controlling for client size (FirmSize) in Model 1, as prior research has shown that auditors act more conservatively when auditing larger clients (e.g., Reynolds & Francis, 2000).…”

Section: Company Characteristicsmentioning

confidence: 99%

See 2 more Smart Citations

The Time Dependence of Audit Firm Alumni Effects: Evidence from Audit Committees

Baumann

Ratzinger‐Sakel

2020

Int J Auditing

View full text Add to dashboard Cite

This article empirically examines the time dependence of audit quality and audit fee effects resulting from the presence of audit firm alumni (AFA) on audit committees (ACs) in the German setting. Following the European Union's audit reform in 2014, the subject of this study is of particular importance, as European regulators have strengthened the position of ACs, while simultaneously restricting the presence of AFA on ACs. We find that the presence of AFA who have recently left their former employer on ACs is associated with higher audit quality, while we fail to find a significant effect on audit quality with regard to AFA who have left audit firms a longer period of time ago. In addition, the presence of AFA on ACs does not seem to affect audit fees. To the best of our knowledge, this study is the first to demonstrate time-dependent AFA effects related to ACs.

show abstract

Section: Methodsmentioning

confidence: 99%

Section: Company Characteristicsmentioning

confidence: 99%

Section: Company Characteristicsmentioning

confidence: 99%

See 1 more Smart Citation

The Time Dependence of Audit Firm Alumni Effects: Evidence from Audit Committees

Baumann

Ratzinger‐Sakel

2020

Int J Auditing

View full text Add to dashboard Cite

show abstract

“…On the other side, opponents of the joint audit approach justified their point of view and argued that joint audit is a net burden and does not make any difference in the auditors' ability to constrain earnings management [42]. In addition, joint audit is not associated with higher audit quality but it is associated with higher costs (audit or total fees) and does not have an impact on the value of the firm or auditor independence [43,44]. More than that, opponents found evidence, that joint audit that involves two Big 4 audit firms is associated with lower reporting quality.…”

Section: Joint Audit Scenariomentioning

confidence: 99%

Effect of Audit Quality on Non-Professional Investors Decisions: Experimental Evidence from Egypt

Ibrahim¹,

Badawy²

2019

Int J Account Res

View full text Add to dashboard Cite

Purpose of this paper: The purpose of this paper is to investigate non-professional investors' perceptions of audit quality proxied by audit firm size on their desirability to invest and their estimates of firm value. Design/methodology/approach: Two within-subjects experiments were designed to test non-professional investors' perception regarding the impact of audit quality on their desirability to invest and their estimates of firm value in a single audit scenario and a joint audit scenario. Non-parametric statistical tests were used to test the research hypotheses. Findings: In a single audit scenario, investors perceive a superior quality for the audit services provided by a big 4 versus a non-big 4. In the case of a joint audit, the Accountability State Authority does not have the same superiority of audit quality versus a big 4 firm when it comes to Egyptian non-professional investors' perception for the audit quality provided. Research limitations/implications: This paper uses postgraduate students that are registered in the financial accounting and auditing diploma in the faculty of commerce-Alexandria University as a proxy for non-professional investors. Real investors were difficult to recruit as subjects for the experiment conducted. Social and practical implications: The results of the study imply a lower non-professional investors' perception for the quality of the audit services provided by the governmental body in Egypt, which is responsible for auditing all financial matters for governmental units. This result is alarming and needs immediate attention from the governmental bodies in Egypt. What is original/value of paper? This paper is the first to examine the impact of audit quality on nonprofessional investors' desirability to invest and their estimates of firm value in Egypt. The paper focuses on the audit quality of the Accountability State Authority in comparison with that of the Big 4 firms, which was not examined before in Egypt. The paper contributes to the existing literature examining audit quality services in emerging markets.

show abstract

“…This is true for the study by Andre et al (2016) who studied the change in abnormal accruals in a transnational sample (France, Italy, UK) for the period 2007-2011. The same applies to the study byLesage et al (2016) for Denmark in the period 2002-2010. In a country comparison between Analogous to the audit quality, empirical studies can be found that have measured no influence of joint audits on audit fees.…”

mentioning

confidence: 92%

What do we know about empirical joint audit research? A literature review

Velte

2017

Accounting and Financial Control

View full text Add to dashboard Cite

This literature review evaluates empirical studies which concentrate on economic effects on joint audits from an international perspective. We briefly introduce the theoretical and empirical joint audit framework that comprises an adequate structure of the state-of-the-art of empirical research in this field. This is followed by a discussion of the following output factors of joint audits: (1) audit quality; (2) audit costs and (3) audit market concentration. We will summarize the key findings in each area, and provide a description of the analyzed proxies. Finally, we will discuss the current limitations of the studies and give useful recommendations for future empirical research activities in this topic.

show abstract

Consequences of the Abandonment of Mandatory Joint Audit: An Empirical Study of Audit Costs and Audit Quality Effects

Cited by 55 publications

References 34 publications

The Time Dependence of Audit Firm Alumni Effects: Evidence from Audit Committees

The Time Dependence of Audit Firm Alumni Effects: Evidence from Audit Committees

Effect of Audit Quality on Non-Professional Investors Decisions: Experimental Evidence from Egypt

What do we know about empirical joint audit research? A literature review

Contact Info

Product

Resources

About