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Auditor tenure and audit quality in Spanish state-owned foundations

Author

Listed:
  • González-Díaz, Belén
  • García-Fernández, Roberto
  • López-Díaz, Antonio

Abstract

This paper aims to analyze the impact of auditor tenure on audit quality. The research is motivated by the absence of consensus in published works, and by the scarcity of studies carried out on non-profit organizations. Using a sample of 254 audits carried out between 2003 and 2010 on Spanish state-owned foundations, we find that, although foundation audit quality decreases as tenure length increases, this quality loss does not become apparent until the sixth year of the foundation–auditor relationship, after an initial five years of improvement in quality. The empirical evidence is important for regulators and financial statement users, given that it suggests the need for the introduction of tenure-reducing measures which, at the same time, also ensure a minimum tenure period.

Suggested Citation

  • González-Díaz, Belén & García-Fernández, Roberto & López-Díaz, Antonio, 2015. "Auditor tenure and audit quality in Spanish state-owned foundations," Revista de Contabilidad - Spanish Accounting Review, Elsevier, vol. 18(2), pages 115-126.
    • Handle: RePEc:eee:spacre:v:18:y:2015:i:2:p:115-126
    DOI: 10.1016/j.rcsar.2014.04.001
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    References listed on IDEAS

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    Cited by:

    1. Ionela-Corina CHERSAN, 2019. "Audit Quality and Several of Its Determinants," The Audit Financiar journal, Chamber of Financial Auditors of Romania, vol. 17(153), pages 1-93.

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    More about this item

    Keywords

    Auditor tenure; Audit quality; Non-profit organizations; Foundations; Logistic regression; Permanencia del auditor; Calidad de la auditoría; Entidades no lucrativas; Fundaciones; Regresión logística;
    All these keywords.

    JEL classification:

    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing
    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing

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