The costs and benefits of retirement policies at U.S. audit firms

Burke, Jenna; Hoitash, Rani; Hoitash, Udi; Xiao, Summer

doi:10.1016/j.jaccpubpol.2021.106824

Cited by 9 publications

(14 citation statements)

References 40 publications

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“…This finding supports other studies showing that diverse work experience is valuable to employees (Menon and Pfeffer, 2003;Bradley et al, 2017;Georgakakis and Ruigrok, 2017). In addition, consistent with Lee et al (2019), Burke et al (2019) and Burke et al (2021), we find that in Big N firms, female partners, partners with bigger alumni networks, partners who are less busy and partners with longer years at work command higher audit fees [19]. We also find that BUSYNESS is negative and significant in the non-Big N sample, consistent with Burke et al (2021).…”

Section: Summary Statisticssupporting

confidence: 90%

“…The findings demonstrate the importance of partner characteristics for career advancement and extend our knowledge in this area that was previously based largely on international studies (Meuwissen, 1998;Carter and Spence, 2014;Downar et al, 2021). In addition, our investigation of audit quality also contributes to the growing literature at the engagement partner level in the USA (Krishnan and Wang, 2018;Burke et al, 2019;Lee et al, 2019;Almer et al, 2020;Burke et al, 2021;Zimmerman et al, 2021). 5.…”

Section: Discussionsupporting

confidence: 74%

“…Second, our study advances the current research examining audit partner characteristics and audit outcomes in the US market (Krishnan and Wang, 2018; Burke et al , 2019; Almer et al , 2020; Burke et al , 2021; Zimmerman et al , 2021) [3]. The most relevant study to ours is Burke et al (2019), where the authors explore certain partner characteristics and their relationships to discretionary accruals and audit fees.…”

Section: Introductionmentioning

confidence: 85%

“…We use the following OLS (logit) model for the audit fees (restatements) analysis. Since prior literature has established significant differences between Big N and non-Big N firms (Lennox and Pittman, 2010;Berglund et al, 2018), we estimate the following model on the Big N and non-Big N subsamples separately: Burke et al, 2021;Zimmerman et al, 2021), we use several common control variables in both the restatements and audit fees models and include additional model-specific control variables. Proxies for audit complexity include the natural log of client's total assets (LNASSETS), the natural log of business segments (LNBUSSEG) and geographic segments (LNGEOSEG) and an indicator for foreign income (FOREIGN).…”

Section: Audit Qualitymentioning

confidence: 99%

“…To add to the recent studies on partner traits and audit outcomes (Kung et al , 2019; Burke et al , 2019; Lee et al , 2019; Burke et al , 2021; Zimmerman et al , 2021), we also investigate whether partner characteristics influence audit quality. Specifically, we focus on partner characteristics unexamined in prior research: detailed prior work experience outside the firm and attainment of a master’s degree.…”

Section: Introductionmentioning

confidence: 99%

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Audit partner characteristics, career advancement and audit quality in the USA

Cai

Ciccone

et al. 2022

MAJ

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Purpose This study aims to explore the relation among US audit partners’ characteristics, their career advancement and audit quality. Design/methodology/approach This study uses data from Public Company Accounting Oversight Board Form AP, Auditor Reporting of Certain Audit Participants, and publicly available online data sources. The hand-collected data on audit partners’ personal characteristics include gender, work experience and educational background. The measures for audit quality include restatements and audit fees. Findings The authors find that audit partner characteristics matter for the time it takes an individual to reach partnership after completing a bachelor’s degree. There are significant differences in work experience and educational background between partners in the largest (Big N) audit firms and smaller (non-Big N) audit firms. Audit partner traits are related to audit quality, and the effects differ between Big N and non-Big N partners. Originality/value The literature has examined audit partners’ career paths using international data. However, little empirical academic research has examined the career advancement of US audit partners. This study provides initial insights on the career advancement of US partners on a large scale and complements the recent research that examines audit partner characteristics and audit quality in the US market.

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Section: Summary Statisticssupporting

confidence: 90%

Section: Discussionsupporting

confidence: 74%

Section: Introductionmentioning

confidence: 85%

Section: Audit Qualitymentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Audit partner characteristics, career advancement and audit quality in the USA

Cai

Ciccone

et al. 2022

MAJ

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Auditor partners’ decision behaviors before retirement—the moderating effect of industry specialists

Kuo,

Lin

2024

Asia-Pacific Journal of Accounting & Economics

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The importance of audit partners' risk tolerance to audit quality

Pittman

Stein

Valentine

2023

Contemporary Accting Res

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Relying on their history of legal infractions to measure individuals' risk tolerance, we examine the association between engagement partners' risk appetites and audit quality in the United States. Criminology and economics research links infraction activity with enduring personality traits that capture an individual's risk tolerance. Our evidence supports the prediction that partners known to engage in risky off‐the‐job behaviors conduct lower quality audits. Specifically, we find that clients of partners with prior legal infractions exhibit a higher likelihood of material misstatements revealed through subsequent restatements, greater propensity to misstate based on the F‐score, more instances of “missed” material weaknesses, and less timely loss recognition, while also paying lower audit fees. In cross‐sectional results consistent with expectations, we generally find that the impact of partners' risk tolerance on audit quality is more heavily concentrated in clients of non–Big 4 firms and offices without industry expertise. Collectively, our analysis contributes to emerging research on the role that individual partner characteristics play in shaping audit outcomes.This article is protected by copyright. All rights reserved.

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The costs and benefits of retirement policies at U.S. audit firms

Cited by 9 publications

References 40 publications

Audit partner characteristics, career advancement and audit quality in the USA

Audit partner characteristics, career advancement and audit quality in the USA

Auditor partners’ decision behaviors before retirement—the moderating effect of industry specialists

The importance of audit partners' risk tolerance to audit quality

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