Audit Partner Tenure, Audit Firm Tenure, and Discretionary Accruals: Does Long Auditor Tenure Impair Earnings Quality? *

Audit Partner Tenure, Audit Firm Tenure, and Discretionary Accruals: Does Long Auditor Tenure... Contemporary Accounting Research Vol. 25 No. 2 (Summer 2008) pp. 415–45 © CAAA doi:10.1506/car.25.2.5 Contemporary Accounting Research for audit partner rotation also have been adopted in the Netherlands and Germany. In Japan, beginning in April 2004, audit partners and reviewing partners were prohibited from being engaged in auditing the same listed company over a period of seven consecutive years.3 Several recent studies investigate the relation between audit firm tenure and earnings/audit quality for U.S. companies. Their findings are generally inconsistent with the argument that earnings/audit quality deteriorates with extended audit firm tenure. On the other hand, despite the practice of audit partner rotation being suggested and required for years, very few studies have investigated whether longer partner tenure is associated with lower earnings/audit quality. We think that the most likely reason for this lack of research attention is that data on partner tenure are not publicly available, because audit reports in most countries do not disclose the audit partner’s name. In addition, in places where audit partner rotation is required, there can be no case of long partner tenure, so it is impossible to investigate whether or not earnings/audit quality deteriorates with extended partner tenure. One exception is http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Contemporary Accounting Research Wiley

Audit Partner Tenure, Audit Firm Tenure, and Discretionary Accruals: Does Long Auditor Tenure Impair Earnings Quality? *

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Publisher
Wiley
Copyright
2008 Canadian Academic Accounting Association
ISSN
0823-9150
eISSN
1911-3846
D.O.I.
10.1506/car.25.2.5
Publisher site
See Article on Publisher Site

Abstract

Contemporary Accounting Research Vol. 25 No. 2 (Summer 2008) pp. 415–45 © CAAA doi:10.1506/car.25.2.5 Contemporary Accounting Research for audit partner rotation also have been adopted in the Netherlands and Germany. In Japan, beginning in April 2004, audit partners and reviewing partners were prohibited from being engaged in auditing the same listed company over a period of seven consecutive years.3 Several recent studies investigate the relation between audit firm tenure and earnings/audit quality for U.S. companies. Their findings are generally inconsistent with the argument that earnings/audit quality deteriorates with extended audit firm tenure. On the other hand, despite the practice of audit partner rotation being suggested and required for years, very few studies have investigated whether longer partner tenure is associated with lower earnings/audit quality. We think that the most likely reason for this lack of research attention is that data on partner tenure are not publicly available, because audit reports in most countries do not disclose the audit partner’s name. In addition, in places where audit partner rotation is required, there can be no case of long partner tenure, so it is impossible to investigate whether or not earnings/audit quality deteriorates with extended partner tenure. One exception is

Journal

Contemporary Accounting ResearchWiley

Published: Jun 1, 2008

References

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