Does Audit Firm Tenure Matter to Audit Committee Members? Evidence from an Accounting Dispute

This study examines the effects of Big 4 audit firm tenure on audit committee member support for the auditor in an auditor/management dispute over a subjective accounting issue. One hundred eighteen U.S. public company audit committee members participated in an experiment with audit firm tenure (sho...

Full description

Saved in:
Bibliographic Details
Published in:Accounting horizons 2019-06, Vol.33 (2), p.25-41
Main Authors: Rummell, Janice E., DeZoort, F. Todd, Hermanson, Dana R.
Format: Article
Language:English
Subjects:
Accounting firms
Audit committees
Auditing profession
Auditors
Audits
Between-subjects design
Big Four accounting firms
Credibility
Financial reporting
Perceptions
Reliability
Tenure
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 study examines the effects of Big 4 audit firm tenure on audit committee member support for the auditor in an auditor/management dispute over a subjective accounting issue. One hundred eighteen U.S. public company audit committee members participated in an experiment with audit firm tenure (short/long) manipulated randomly between subjects. The results indicate that participants in the long audit firm tenure group provide more support for the auditor in the dispute than participants in the short tenure group. Audit committee support for the auditor is positively related to audit committee member experience and CPA status, as well as perceived management pressure to meet analyst expectations, but negatively related to perceived management experience in financial reporting. Finally, audit committee members' perceptions of audit firm reliability (i.e., credibility and dependability) mediate the audit firm tenure-auditor support relation. Overall, our results suggest enhanced audit committee support for longer-tenured auditors.
ISSN:0888-7993
1558-7975
DOI:10.2308/acch-52346