Publication
Title
Does the identity of engagement partners matter? An analysis of audit partner reporting decisions
Author
Abstract
This study examines the persistence and economic consequences of variations in reporting style across audit partners in individual engagements. Our results show that both aggressive and conservative audit reporting, measured by the pattern of prior Type 2 and Type 1 audit reporting error rates in auditor-specific clienteles, persist over time and extend to other clients of the same partner. Analyses of abnormal accruals and persistence of client firms accrual estimates corroborate this finding, and hold both for private and publicly listed companies. Further, our results also show that the market penalizes client firms susceptible to aggressive audit partner reporting decisions. In particular, we find that our proxies for aggressive audit reporting are related to higher interest rates, worse credit ratings and less favorable forecasts of insolvency for private client companies, and a lower Tobin's Q for publicly listed client companies. Collectively, these results imply that audit partner aggressive or conservative reporting is a systematic audit partner attribute and not randomly distributed across engagements.
Language
English
Source (journal)
Contemporary accounting research. - Vancouver, B.C., 1984, currens
Publication
Vancouver, B.C. : 2015
ISSN
0823-9150 [print]
1911-3846 [online]
Volume/pages
32:4(2015), p. 1443-1478
ISI
000368431800007
Full text (Publisher's DOI)
Full text (publisher's version - intranet only)
UAntwerpen
Faculty/Department
Research group
Publication type
Subject
External links
Web of Science
Record
Identification
Creation 04.02.2016
Last edited 09.10.2017