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Audit firm tenure and audit quality: A cross‐European study
Journal of International Financial Management & Accounting ( IF 2.808 ) Pub Date : 2019-04-26 , DOI: 10.1111/jifm.12098
Josep Garcia‐Blandon 1 , Josep Maria Argilés‐Bosch 2 , Diego Ravenda 3
Affiliation  

Directive 2014/56/EU and Regulation (EU) No. 537/2014, which came into effect in June 2016, introduced the mandatory rotation of audit firms after a maximum period of 10 years with the same client. We conduct a cross‐European study with the aim of assessing whether long audit firm tenures are associated with lower levels of audit quality. The sample for the study is based on the constituents of the Standard & Poor's Europe 350 index for the years between 2009 and 2016, and we utilize three different sets of proxies for audit quality: discretionary accruals, differences between reported earnings and earnings benchmarks, and accounting restatements. The main result of the study finds that companies with more than 10 years of tenure with their auditors do not have a lower audit quality than other firms. In fact, this study provides some evidence of a higher audit quality for these firms. The results are robust to various checks. Therefore, if there does not seem to be a problem of a lack of audit quality associated with long audit firm tenures, the necessity of establishing a maximum tenure, as the new European regulation does, may be questioned.

中文翻译:

审计公司的任期和审计质量:一项跨欧洲研究

于2014年6月生效的2014/56 / EU指令和第537/2014号法规(EU)引入了在与同一客户的最长期限为10年后对会计师事务所进行强制轮换的规定。我们进行了一项跨欧洲研究,旨在评估审计公司长期任职是否与较低的审计质量有关。该研究的样本基于2009年至2016年间的标准普尔欧洲350指数的成分,并且我们使用三组不同的代理来评估审计质量:可自由支配的应计费用,报告的收益与收益基准之间的差异以及会计重述。研究的主要结果发现,与审计师任职超过10年的公司的审计质量没有比其他公司低。事实上,这项研究为这些公司的审计质量提供了一些证据。结果对各种检查都是可靠的。因此,如果似乎不存在与长期审计公司任期有关的审计质量不足的问题,那么就可能会质疑像欧洲新法规那样建立最高任期的必要性。
更新日期:2019-04-26
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