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The Effect of the Auditors’ Rotation on the Accounting Quality in the Case of Romanian Listed Companies under the Transition to IFRS

Author

Listed:
  • Ioan-Bogdan ROBU

    (Alexandru Ioan Cuza University of Iasi)

  • Maria GROSU

    (Alexandru Ioan Cuza University of Iasi)

  • Costel ISTRATE

    (Alexandru Ioan Cuza University of Iasi)

Abstract

In assuring the quality of the financial information issued by the listed companies, the role of the financial auditor is to express his own opinion regarding the compliance of the financial statements with a financial reporting framework. In order for this opinion to be a reliable one, the auditor has to develop it considering the specific requirements of competence, ethic judgment and professional ethics. Meeting these requirements supposes significant efforts from the auditors, and also from the professional organization they are affiliated to, as well as the audited companies. We appreciate that the financial auditors’ financial independence and objectivity are also assured by their periodical rotation. The scope of this study is to analyze and evaluate the influence of the auditor’s rotation on the information value relevance from the individual financial statements and from the consolidated statements that make the subject of financial auditing. The study was carried out on a number of 64 Romanian companies, listed on the Bucharest Stock Exchange, between 2006 and 2014. The research objectives considered the estimation of the auditor’s rotation influence on the value relevance of the reported information of the Romanian BSE listed companies. The results of the study show the fact that the auditor’s rotation significantly contributes to the change of the value relevance degree.

Suggested Citation

  • Ioan-Bogdan ROBU & Maria GROSU & Costel ISTRATE, 2016. "The Effect of the Auditors’ Rotation on the Accounting Quality in the Case of Romanian Listed Companies under the Transition to IFRS," The Audit Financiar journal, Chamber of Financial Auditors of Romania, vol. 14(133), pages 1-65, January.
    • Handle: RePEc:aud:audfin:v:133:y:2016:i:14:p:65
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    References listed on IDEAS

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    2. Veronica Grosu & Dorel Mateș & Monica-Laura Zlati & Svetlana Mihaila & Marian Socoliuc & Marius-Sorin Ciubotariu & Simona-Maria Tanasă, 2020. "Econometric Model for Readjusting Significance Threshold Levels through Quick Audit Tests Used on Sustainable Companies," Sustainability, MDPI, vol. 12(19), pages 1-32, October.
    3. Sailendra SAILENDRA & Etty MURWANINGSARI & Sekar MAYANGSARI, 2019. "The Influence of Free Float Shares and Audit Quality on Company Performance: Evidence from Indonesia," The Audit Financiar journal, Chamber of Financial Auditors of Romania, vol. 17(154), pages 274-274.
    4. repec:fst:rfsisf:v:13:y:2022:i:13:p:29-36 is not listed on IDEAS
    5. Mihai Carp & Costel Istrate, 2021. "Audit Quality under Influences of Audit Firm and Auditee Characteristics: Evidence from the Romanian Regulated Market," Sustainability, MDPI, vol. 13(12), pages 1-16, June.
    6. Andreea Claudia Crucean, 2019. "The Information Content Of Audit Opinion For Users Of Financial Statements," Oradea Journal of Business and Economics, University of Oradea, Faculty of Economics, vol. 4(2), pages 91-101, September.
    7. Mariana-Cristina Bulucea, 2022. "Audit firm rotation and audit quality: a literature review," Journal of Financial Studies, Institute of Financial Studies, vol. 13(7), pages 29-36, November.
    8. IOAN-BOGDAN ROBU & Costel ISTRATE & Mihai CARP & CRISTIAN POPESCU & MIHAELA-ALINA ROBU, 2016. "The Value Relevance Of Financial Information Under The Influence Of Country Risks. The Case Of The Indian Listed Companies," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 18, pages 77-93, December.

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    More about this item

    Keywords

    information quality; value relevance; independence; auditor’s rotation; Big4 – Non Big 4; Bucharest Stock Exchange;
    All these keywords.

    JEL classification:

    • C58 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Financial Econometrics
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing

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