Publication Type
Journal Article
Version
acceptedVersion
Publication Date
9-2010
Abstract
We investigate whether the relation between auditor tenure and audit quality is conditional on auditor specialization and fee dependence. Although prior studies have investigated the relation between extended auditor-client tenure and audit quality, none has examined how this relation is jointly influenced by both auditor specialization and fee dependence. Our main analyses, using accrual quality as a measure of audit quality, show that firms audited by specialists (vs. non-specialists) have relatively higher audit quality with extended auditor tenure, and that this relation is negatively moderated by auditors’ fee dependence on clients. These results are robust to sensitivity tests, and alternative proxies for audit quality such as the issuance of going concern opinions and the market’s response to quarterly earnings surprises.
Keywords
auditor tenure, audit quality, auditor specialization, fee dependence
Discipline
Accounting | Business Law, Public Responsibility, and Ethics | Corporate Finance
Research Areas
Corporate Governance, Auditing and Risk Management
Publication
Contemporary Accounting Research
Volume
27
Issue
3
First Page
923
Last Page
957
ISSN
0823-9150
Identifier
10.1111/j.1911-3846.2010.01031.x
Publisher
Wiley
Citation
LIM, Chee Yeow and TAN, Hun-Tong.
Does auditor tenure improve audit quality? Moderating effects of industry specialization and fee dependence. (2010). Contemporary Accounting Research. 27, (3), 923-957.
Available at: https://ink.library.smu.edu.sg/soa_research/11
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1111/j.1911-3846.2010.01031.x
Included in
Accounting Commons, Business Law, Public Responsibility, and Ethics Commons, Corporate Finance Commons