IDEAS home Printed from https://ideas.repec.org/a/ami/journl/v12y2013i2p263-279.html
   My bibliography  Save this article

Does Audit Quality Improve After the Implementation of Mandatory Audit Partner Rotation?

Author

Listed:
  • Gary MONROE
  • Sarowar HOSSAIN

    (University of New South Wales, Australia)

Abstract

We investigate whether audit partner tenure and audit quality associations remain significant after the implementation of mandatory audit partner rotation. Carey and Simnett (2006) report a significant negative association between long audit partner tenure and the propensity to issue qualified going-concern opinions for financially distressed companies. However, their study uses data from a period when there was no restriction on the length of audit partner tenure, i.e., from a period before there was mandatory audit partner rotation after a fixed period of time. We revisit this issue using Australian data from a period after the introduction of mandatory audit partner rotation. We find a significant positive association between audit partner tenure when tenure is five years or more and the likelihood of an auditor issuing a going-concern opinion for a financially distressed company. Our findings provide evidence that auditors are more likely to issue qualified going-concern opinions for financially distressed companies when there is mandatory audit partner rotation after a fixed period of time. Our findings suggest that the implementation of mandatory audit partner rotation has improved audit quality.

Suggested Citation

  • Gary MONROE & Sarowar HOSSAIN, 2013. "Does Audit Quality Improve After the Implementation of Mandatory Audit Partner Rotation?," Journal of Accounting and Management Information Systems, Faculty of Accounting and Management Information Systems, The Bucharest University of Economic Studies, vol. 12(2), pages 263-279, June.
  • Handle: RePEc:ami:journl:v:12:y:2013:i:2:p:263-279
    as

    Download full text from publisher

    File URL: http://online-cig.ase.ro/RePEc/ami/articles/12_2_6.pdf
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Elizabeth Carson & Neil Fargher & Yuyu Zhang, 2016. "Trends in Auditor Reporting in Australia: A Synthesis and Opportunities for Research," Australian Accounting Review, CPA Australia, vol. 26(3), pages 226-242, September.
    2. Bedford, Anna & Bugeja, Martin & Czernkowski, Robert & Bond, David, 2023. "Is the effect of shared auditors driven by shared audit partners? The case of M&As," The British Accounting Review, Elsevier, vol. 55(2).
    3. Kris Hardies & Sarowar Hossain & Larelle (Ellie) Chapple, 2021. "Archival research on audit partners: assessing the research field and recommendations for future research," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(3), pages 4209-4256, September.
    4. Wisdom Kalabeke & Muhammad Sadiq & Ooi Chee Keong, 2019. "Auditors Tenure and Financial Reporting Quality: Evidence from a Developing Country," International Journal of Asian Social Science, Asian Economic and Social Society, vol. 9(5), pages 335-341, May.
    5. Jennifer Martínez‐Ferrero & Isabel‐María García‐Sánchez & Emiliano Ruiz‐Barbadillo, 2018. "The quality of sustainability assurance reports: The expertise and experience of assurance providers as determinants," Business Strategy and the Environment, Wiley Blackwell, vol. 27(8), pages 1181-1196, December.
    6. Puschmann, Lina Carine, 2019. "Die Rotation des verantwortlichen Prüfungspartners als Instrument zur Steigerung der Prüfungsqualität," Junior Management Science (JUMS), Junior Management Science e. V., vol. 4(4), pages 553-565.
    7. Neal Arthur & Medhat Endrawes & Shawn Ho, 2017. "Impact of Partner Change on Audit Quality: An Analysis of Partner and Firm Specialisation Effects," Australian Accounting Review, CPA Australia, vol. 27(4), pages 368-381, December.

    More about this item

    Keywords

    going-concern opinion; audit partner tenure; distressed companies; mandatory rotation;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ami:journl:v:12:y:2013:i:2:p:263-279. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Cristina Tartavulea (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.