From joint to single audits – audit quality differences and auditor pairings

Holm, Claus; Thinggaard, Frank

doi:10.1080/00014788.2017.1381910

Cited by 20 publications

(90 citation statements)

References 30 publications

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“…With regard to the available evidence, Lesage et al (2017) and Holm and Thinggaard (2018) take advantage of the unique Danish setting (where public companies had to conduct joint audits until 2005). Lesage et al (2017) investigate the years between 2002 and 2010, not observing any association between joint audits and audit quality.…”

Section: Background and Hypothesis Developmentmentioning

confidence: 99%

“…Lesage et al (2017) investigate the years between 2002 and 2010, not observing any association between joint audits and audit quality. Subsequently, Holm and Thinggaard (2018) address the joint audit-audit quality relationship by making use of both qualitative and archival research methods. As for the first approach, the results of a survey of Danish chief financial officers (CFO) show that they do not perceive different levels of audit quality under single or joint audit regimes.…”

Section: Background and Hypothesis Developmentmentioning

confidence: 99%

“…Lesage et al (2017) and Holm and Thinggaard (2018) measure audit quality by discretionary accruals, and Lesage et al (2017) also use the likelihood of meeting earnings benchmarks. Both studies implicitly assume that any change in audit quality between 2002 and 2010 (Lesage et al, 2017) or between 2004and 2008(Holm & Thinggaard, 2018 is due to the change in the joint audit regulation; therefore, ignoring other potentially important events for the audit activity, such as the implementation of the mandatory audit partner rotation in the EU. The inclusion of year-fixed effects in the models does not allow to control for confounding effects.…”

Section: Background and Hypothesis Developmentmentioning

confidence: 99%

“…André et al (2016) compare audit quality of listed companies in France, with the situation in Italy and the UK. The study is conducted for the 2007-2011 research period and, as Lesage et al (2017) and Holm and Thinggaard (2018), measure audit quality with accrualbased variables. They do not observe different audit quality between France and either Italy or the UK.…”

Section: Background and Hypothesis Developmentmentioning

confidence: 99%

“…First, because empirical research on mandatory joint audits is scarce, with only a few articles empirically investigating its impact on financial reporting quality. Two of them examine the situation in Denmark around the abandonment of the mandatory joint audit rule in 2004 (Lesage et al, 2017;Holm & Thinggaard, 2018), and a third one (André et al, 2016) investigates differences in audit quality between French firms (subject to mandatory joint audit) and Italian and UK firms (not subject to joint audit). Secondly, the evidence reported by Lesage et al (2017) and Holm and Thinggaard (2018) refers to the Danish audit market at the beginning of the century, and after the important changes which have affected the audit activity since then (i.e., Directive 2006/43/EC on statutory audits), is not informative enough for the ongoing debate.…”

Section: Introductionmentioning

confidence: 99%

See 4 more Smart Citations

Mandatory Joint Audit and Audit Quality in the Context of the European Blue Chips

García-Blandón

Castillo‐Merino

Argilés‐Bosch

et al. 2021

Journal of Business Economics and Management

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This study investigates audit quality under joint and single audit regimes with a sample of large European firms. Both, the economic relevance of these companies, and the fact that the impact of joint audit on audit quality should be stronger when the audited company is a blue-chip firm motivate the study. If mandatory joint audit were positively associated with audit quality, French firms, under mandatory joint audit since 1966, should present higher audit quality compared to their European peers. The results do not indicate this to be the case. Specifically, similar levels of discretionary accruals are observed for French and other European firms. Furthermore, for the first time in the literature, evidence is reported indicating that French firms may even present lower audit quality than their European peers, when audit quality is measured by the likelihood of just beating earnings benchmarks. These results are expected to inform the ongoing debate in several countries about joint audits.

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Section: Background and Hypothesis Developmentmentioning

confidence: 99%

Section: Background and Hypothesis Developmentmentioning

confidence: 99%

Section: Background and Hypothesis Developmentmentioning

confidence: 99%

Section: Background and Hypothesis Developmentmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

Mandatory Joint Audit and Audit Quality in the Context of the European Blue Chips

García-Blandón

Castillo‐Merino

Argilés‐Bosch

et al. 2021

Journal of Business Economics and Management

View full text Add to dashboard Cite

show abstract

Multiple audit mechanism, audit quality and cost of debt: empirical evidence from a developing country

El-Dyasty

Elamer

2022

Int J Discl Gov

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This study focuses on the distinctive Egyptian setting, where firms could use multiple audit mechanism voluntarily or mandatory under certain circumstances. We investigate the effects on audit quality and cost of debt. A sample of 1699 firm-year observations of Egyptian listed firms for the 2009-2019 period is used. Abnormal accruals are employed as proxies of audit quality through abnormal working capital accruals and modified-Jones models. Results suggest that joint audits are not associated with both proxies of audit quality. In contrast, the dual audit is positively associated with abnormal accruals leading to conclude that dual audits are not providing a high level of audit quality. But this result holds only in companies with income decreasing discretionary accruals. These results are in line with litigation and reputational risk fears offering motivations for auditors to favour conservative accounting alternatives (i.e., income decreasing discretionary accruals). This implies that firms opting to employ dual audits have a higher level of earnings conservatism. Our evidence also indicates that the choice of multiple audit mechanisms especially joint audits is related to significant increases in the cost of debt, implying a higher perceived level of risk. Further, dual audits decrease the cost of debt only in companies with high earnings management. This study adds to the literature on whether the preference of income-increasing or income decreasing discretionary accruals is related to multiple audit mechanism and consequently affected the cost of debt. Together, our results support the view that voluntary joint audits are not related to audit quality in Egypt compared to mandatory dual audits, which consequently affect the pricing of debt. Our results have important implications for policymakers, audit firms and investors.

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Can mandatory dual audit reduce the cost of equity? Evidence from China

Rui

Wong

et al. 2021

Accounting and Business Research

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From joint to single audits – audit quality differences and auditor pairings

Cited by 20 publications

References 30 publications

Mandatory Joint Audit and Audit Quality in the Context of the European Blue Chips

Mandatory Joint Audit and Audit Quality in the Context of the European Blue Chips

Multiple audit mechanism, audit quality and cost of debt: empirical evidence from a developing country

Can mandatory dual audit reduce the cost of equity? Evidence from China

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