The interaction effects of firm and partner tenure on audit quality

This paper investigates the impact of firm and partner tenure on audit quality, where audit quality is proxied by discretionary accruals. We study a sample of Spanish listed companies between 2005 and 2011 and address both the individual and the interaction effects of firm and partner tenure. Our st...

Full description

Saved in:
Bibliographic Details
Published in:Accounting and business research 2017-01, Vol.47 (7), p.810-830
Main Authors: Garcia-Blandon, Josep, Argiles-Bosch, Josep Maria
Format: Article
Language:English
Subjects:
Accounting firms
Anàlisi multivariable
Auditing
Auditoria
Empreses auditores
Legislació
Legislation
Multivariate analysis
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:This paper investigates the impact of firm and partner tenure on audit quality, where audit quality is proxied by discretionary accruals. We study a sample of Spanish listed companies between 2005 and 2011 and address both the individual and the interaction effects of firm and partner tenure. Our study is motivated by the current debate, particularly intense at the EU level, on the impact of the auditor rotation regime on the quality of auditing. We find that, without considering the interaction effects, firm and partner tenure do not seem to play a relevant role as determinants of audit quality. Importantly, the interaction of firm and partner tenure shows stronger effects on audit quality than both forms of tenure separately considered. Finally, our analysis suggests that audit quality is maximized when medium firm and partner tenures interact. However, results for the interaction variables are sensitive to the accruals estimation method.
ISSN:0001-4788
2159-4260
DOI:10.1080/00014788.2017.1289073