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Impact of audit tenure and audit rotation on the audit quality: Big 4 vs non big 4

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  • Dwi Martani
  • Nur Aulia Rahmah
  • Fitriany Fitriany
  • Viska Anggraita
  • Zhaojun Yang

Abstract

This paper examines the effect of audit tenure and audit rotation on audit quality. This study also examines whether this effect of the rotation is different between the Big 4 and non-Big 4 audit firm. This research was conducted in Indonesia, which is one of the few countries that not only implementing audit partner rotation but also mandatory audit firm rotation. However, in 2015, the mandatory audit firm rotation in Indonesia was abolished. The results show that the relationship between the tenure of auditor and audit quality is not significant. Audit firm rotation positively impacts audit quality, and the positive impact is lower in Big 4. In non-Big 4, audit partner rotation has no effect on audit quality, but audit firm rotation could improve audit quality. Meanwhile, in Big 4, audit partner rotation is sufficient to improve audit quality because they have sufficient partners to perform a quality review.

Suggested Citation

  • Dwi Martani & Nur Aulia Rahmah & Fitriany Fitriany & Viska Anggraita & Zhaojun Yang, 2021. "Impact of audit tenure and audit rotation on the audit quality: Big 4 vs non big 4," Cogent Economics & Finance, Taylor & Francis Journals, vol. 9(1), pages 1901395-190, January.
    • Handle: RePEc:taf:oaefxx:v:9:y:2021:i:1:p:1901395
    DOI: 10.1080/23322039.2021.1901395
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    Citations

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    Cited by:

    1. Florio, Cristina, 2024. "A structured literature review of empirical research on mandatory auditor rotation," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 55(C).
    2. Peng, Cong & Chau, Ka Yin, 2023. "Independent audit quality and corporate cash holdings," Finance Research Letters, Elsevier, vol. 58(PB).
    3. Munkaila Aminu & Bomi Cyril Nomlala & Kiran Baldavoo, 2024. "Examining Mandatory Audit Firm Rotation and Audit Quality in South Africa: Practitioner and Academic Perspectives," International Journal of Economics and Financial Issues, Econjournals, vol. 14(3), pages 40-47, May.
    4. Jean Damascene Mvunabandi & Haruna Maama, 2023. "The Impact of Ethics on the Audit Quality of Firms in Sub-Sahara Africa," International Journal of Economics and Financial Issues, Econjournals, vol. 13(5), pages 119-127, September.

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