Publication Type
Journal Article
Version
publishedVersion
Publication Date
1-2008
Abstract
Mandatory audit partner relation has been adopted in some countries while audit firm rotation is still being debated in many places. Most of the extant research on the relation between auditor tenure and earnings quality provides evidence at the audit firm level. However, since audit firm tenure is correlated with partner tenure and audit firm rotation is more costly than partner rotation, it is important to know whether earnings quality is related to audit firm tenure, partner tenure, or both. We investigate this issue using a sample of Taiwanese companies for which the audit report must be signed by two partners with their names disclosed in the report. Using performance-adjusted discretionary accruals as a proxy for earnings quality, we find that the absolute and positive values of discretionary accruals decrease significantly with partner tenure. After controlling for partner tenure, we find that [ABSTRACT FROM AUTHOR]
Keywords
Audit firm rotation, Audit report, Correlation, Audit process
Discipline
Accounting | Business Law, Public Responsibility, and Ethics | Corporate Finance
Research Areas
Corporate Governance, Auditing and Risk Management
Publication
Contemporary Accounting Research
Volume
25
Issue
2
First Page
415
Last Page
445
ISSN
0823-9150
Identifier
10.1506/car.25.2.5
Publisher
Wiley
Citation
CHEN, Chih-Ying; Lin, Chan-Jane; and Lin, Yu-Chen.
Audit partner tenure, audit firm tenure, and discretionary accruals: Does long auditor tenure impair earnings quality?. (2008). Contemporary Accounting Research. 25, (2), 415-445.
Available at: https://ink.library.smu.edu.sg/soa_research/126
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/10.1506/car.25.2.5
Included in
Accounting Commons, Business Law, Public Responsibility, and Ethics Commons, Corporate Finance Commons