The effects of audit partner pre-client and client-specific experience on audit quality and on perceptions of audit quality

Wuchun Chi, Linda A. Myers, Thomas C. Omer, Hong Xie

Research output: Contribution to journalArticlepeer-review

86 Scopus citations

Abstract

We examine the associations between audit partner pre-client and client-specific experience and audit quality using data from Taiwan, where signing audit partner names are disclosed. Using discretionary accruals and interest rate spreads to proxy for audit quality and perceptions of audit quality, respectively, we find that both pre-client and client-specific experience improve audit quality and creditor perceptions of audit quality. We also find that audit partner pre-client experience is positively associated with audit quality early in the engagement, but not when the partner has been with the client for at least five years. Our findings provide evidence consistent with the assumption underlying the Public Company Accounting Oversight Board’s decision to require the disclosure of engagement partner names. They also suggest that pre-client experience cannot completely mitigate the loss of client-specific knowledge when partner or audit firm turnover occurs.

Original languageEnglish
Pages (from-to)361-391
Number of pages31
JournalReview of Accounting Studies
Volume22
Issue number1
DOIs
StatePublished - Mar 1 2017

Bibliographical note

Publisher Copyright:
© 2016, Springer Science+Business Media New York.

Keywords

  • Audit partner experience
  • Audit quality
  • Auditor tenure
  • Discretionary accruals
  • Interest rate spreads

ASJC Scopus subject areas

  • Accounting
  • General Business, Management and Accounting

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