The effects of a cooling-off period on perceived independence of external auditors: A study in the nonpublic regulatory environment

Wright, Carl N.; Booker, Quinton

doi:10.1016/j.racreg.2009.11.003

Cited by 4 publications

(7 citation statements)

References 4 publications

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“…Our analysis results show that the most commonly and equally employed methods were archival (L3;e.g., Baber et al, ; Basioudis, ; Bird et al, ; Lennox, ; Menon & Williams, ; Ye et al, ) and survey/questionnaire/other empirical (L1;e.g., Ahmad, ; Dart & Chandler, ; Imhoff Jr., ; Iyer & Raghunandan, ; Kaplan & Whitecotton, ; Parlin & Bartlett, ), with 62%, representing almost two‐thirds of the ARD available research. Next, experimental methods (L4;e.g., Abbott et al, ; Martinov‐Bennie et al, ; Wilson, , ; Wright & Booker, ) represented 19%. The nil category (L6) represented 11% of the total papers (e.g., Beasley et al, ; Chapple & Koh, ; Daugherty & Dickins, ).…”

Section: Literature Review Meta‐analysis: Insights and Critiquementioning

confidence: 99%

“…In keeping with the high use of archival and survey methods, analysis of quantitative data was the most widely used data analysis approach, representing 83% of the total papers (e.g., Wilson, ; Wright & Booker, ; Ye et al, ). In total, 11% of the articles, which were primarily of a review or commentary nature, made no mention of a data analysis approach (e.g., Bedard et al, ; Chapple & Koh, ; Tepalagul & Lin, ).…”

Section: Literature Review Meta‐analysis: Insights and Critiquementioning

confidence: 99%

“…Moreover, Naiker et al () found that a 3‐year cooling‐off period may not be warranted and deserves additional investigation. Wright and Booker () found that perceptions of independence increase significantly with a 1‐year cooling‐off period; However, increasing the cooling‐off period from a year to 2 years does not significantly increase perceptions of audit independence.…”

Section: Literature Review Meta‐analysis: Insights and Critiquementioning

confidence: 99%

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The auditor‐to‐client revolving door: A structured literature review

2018

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This study analyzes the underexplored research area of audit revolving door (ARD).The analytical framework categorized the reviewed articles by author and article information, citation, research theme, motivational event, jurisdiction, nature of research, regional focus, organizational focus, research method, data analysis, literature focus, and findings. Our analysis highlights that no particular aspect can be held true or generalized about the ARD phenomenon. The ARD literature is USA dominated, organizationally based, and focused on post-departure issues, employing a quantitative approach with obvious lack of perceptions of stakeholders. We call for more qualitative research that critiques pre-and post-ARD, addressing the "how"and "why" questions, soliciting perceptions of various stakeholders. To frame directions for future research, we refer to three areas: threats, benefits, and safeguards of ARD. Our findings are relevant to research students reviewing the auditing literature to find their own research and to academic auditing researchers looking for appropriate research outlets. KEYWORDS audit firm alumni/affiliation, Audit revolving door, employment of ex-auditor, former auditor, structured literature review generally do not support concerns of significantly impaired auditor independence in these hiring situations. This inconclusive evidence applies to similar issues of ARD impact in relation to audit quality, effectiveness of the coolingoff period, reporting quality, and possible benefits resulting from ARD. This perhaps results in one conclusion: the ARD phenomenon remains an area ripe for further research. With this in mind, we believed that a literature review of the existing ARD research would be a crucial starting step in this regard because it would set the status quo of ARD from the perspective of past research, portray the focus of existing major ARD research themes, and identify the gaps for future research directions. Accordingly, this paper aims to review and critique the existing ARD research, thus suggesting ways forward for future ARD research. KOTB ET AL. 465

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Section: Literature Review Meta‐analysis: Insights and Critiquementioning

confidence: 99%

Section: Literature Review Meta‐analysis: Insights and Critiquementioning

confidence: 99%

Section: Literature Review Meta‐analysis: Insights and Critiquementioning

confidence: 99%

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The auditor‐to‐client revolving door: A structured literature review

2018

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“…The first group indicate the significance of the cooling-off period. Wright and Booker (2010) indicated that the state board of accountancy' members accentuate the importance of a one-year cooling-off period in boosting the level of auditors' independence. Nevertheless, extending the cooling-off period from one to two years does not add value to their perceptions toward auditors' independence (Wright and Booker, 2010).…”

Section: Additional Test: the Cooling Off Periodmentioning

confidence: 99%

The effect of companies’ employment of their ex-auditors on their Audit Quality: Evidence from UK

Aladwey

2021

المجلة العلمیة للبحوث التجاریة

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The UK regulatory bodies mandated two years cooling off period before the former audit team members can hold a managerial position within the client firm. The pertinent literature indicates mixed results around the implications of the companies' employment of their exauditors or what is called Auditor to Client Revolving Door practise (ACRD) on the audit quality. The aim of this paper is to examine the effect of ACRD hires on the audit quality for UK FTSE100 companies for the period from 2008 to 2018. Using the Kothari et al. (2005) model to calculate the absolute value of abnormal accruals, the paper finds that companies with ACRD hires demonstrates lower levels of the absolute accruals compared to other companies with no ACRD hires. This indicates the positive, rather than negative, effect of ACRD employment on the audit quality. Further insights on the corporate hierarchal positions of the ACRD hires reveals that the affiliated non-executive directors that are members in the audit committees significantly reduce the levels of the absolute accruals, highlighting their oversight and governance role. The paper also finds the inescapable of the cooling-off period in enhancing the audit quality for the companies with affiliated compared to those with non-affiliated hires.

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“…Practitioners randomly received a summary of Frankel et al, Ashbaugh et al, or both. This research design differs from other research on practitioners' beliefs about independence in that other studies manipulated information found in hypothetical audit cases e.g., Imhoff, 1978;Lowe et al, 1999;Wright and Booker, 2005).…”

Section: Introductionmentioning

confidence: 99%