Audit Partner Rotation: Evidence of Changes in Audit Partner Tenure as the Result of Mandatory Regulation in Australia

2007 ◽  
Vol 1 (1) ◽  
pp. A28-A35 ◽  
Author(s):  
Kirsty Ryken ◽  
Renee Radich ◽  
Neil L. Fargher
Keyword(s):  
Future Research ◽  
Differential Impact ◽  
Remote Locations ◽  
Audit Firms ◽  
Before And After ◽  
Mandatory Rules ◽  
Mandatory Rotation ◽  
Audit Partner Rotation

SYNOPSIS: This study examines rotation practices before and after the implementation of mandatory audit partner rotation policies in Australia. We focus on the incidence of long partner tenure. Despite prior voluntary rotation practices, the results suggest that: the introduction of mandatory rules in 2003 significantly reduced the incidence of long partner tenure; auditors in locations outside Australia’s three major cities are likely to have longer audit partner tenure than those located in the major cities; and there is evidence of the differential impact of mandatory audit partner rotation on smaller audit firms. Future research could examine the need for reasonable exemptions to mandatory rotation requirements given the higher costs of partner rotation to smaller audit firms and to firms in remote locations.

scholarly journals Does Mandatory Audit Partner Rotation Influence Auditor Selection Strategies?

2021 ◽  
Vol 13 (4) ◽  
pp. 2058
Author(s):  
Li-Jen He ◽  
Jianxiong Chen
Keyword(s):  
Information Disclosure ◽  
Switching Costs ◽  
Influential Factor ◽  
Rotation Periods ◽  
Selection Strategies ◽  
Audit Firms ◽  
Mandatory Rotation ◽  
Signaling Strategies ◽  
Audit Partner Rotation ◽  
Industry Specialist

Under mandatory rotation, the switching cost may be the most influential factor to be considered for experienced mandatory audit rotations. This study attempts to explore the impacts of the mandatory rotation mechanism on company information disclosure and signaling strategies by examining the audit partner and audit firm switching activities of the mandatory rotation company. Are companies that experience mandatory audit rotation more likely to engage industry specialist auditors with better industry-specific knowledge and reputations to minimize the costs of mandatory rotations? Furthermore, in the case of being required to rotate audit partners, do companies rotate only audit partners, rather than changing both audit partners and audit firms at the same time, to minimize switching costs? To explore these problems, this study examined auditor rotations of listed companies in Taiwan from 2004 to 2016; and expected that, to minimize switching costs, mandatory rotation companies are more likely to select industry specialist auditors to be their successor auditors, and are less likely to rotate audit partners and audit firms at the same time. For the audit partner rotations, we find that, compared to voluntarily rotated companies, a higher percentage of companies choose industry specialist auditors to be their successor audit partners under mandatory rotation. Furthermore, the empirical results support our expectations that companies that experience mandatory audit partner rotation are significantly more likely to engage industry specialists to be their successor audit partners and are more likely to rotate only audit partners rather than rotating both audit partners and audit firms around mandatory audit rotation periods.

On the Economics of Mandatory Audit Partner Rotation and Tenure: Evidence from PCAOB Data

2020 ◽  
pp. 0000-0000
Author(s):  
Brandon Gipper ◽  
Luzi Hail ◽  
Christian Leuz
Keyword(s):  
Cross Section ◽  
Audit Quality ◽  
Audit Fees ◽  
Large Cross Section ◽  
Public Firms ◽  
Audit Market ◽  
Audit Firms ◽  
Mandatory Rotation ◽  
Audit Team ◽  
Audit Partner Rotation

We analyze the effects of partner tenure and mandatory rotation on audit quality, pricing, and production for a large cross-section of U.S. public firms over the 2008 to 2014 period. On average, we find no evidence that audit quality declines over the tenure cycle and little support for "fresh-look" benefits provided by the new audit partner. Audit fees decline and audit hours increase after mandatory rotation, but then reverse over the tenure cycle. We also find evidence that audit firms use "shadowing" in preparation for a lead partner turnover. These effects differ by competitiveness of the local audit market, client size, and partner experience. When multiple members of the audit team commence at a new client, the transition appears to be more disruptive and more likely to exhibit audit quality effects. Our findings point to costly efforts by the audit firms to minimize disruptions and audit failures around mandatory rotations.

The Effect of Office Changes within Audit Firms on Clients' Audit Quality and Audit Fees

2020 ◽  
Vol 39 (1) ◽  
pp. 71-99
Author(s):  
Carl W. Hollingsworth ◽  
Terry L. Neal ◽  
Colin D. Reid
Keyword(s):  
Audit Quality ◽  
Audit Fees ◽  
Additional Analysis ◽  
Audit Firm ◽  
Audit Firms ◽  
Audit Fee ◽  
The Impact ◽  
Audit Partner Rotation

SUMMARY While prior research has examined audit firm and audit partner rotation, we have little evidence on the impact of within-firm engagement team disruptions on the audit. To examine these disruptions, we identify a unique sample of companies where the audit firm issuing office changed but the audit firm did not change and investigate the effect of these changes on the audit. Our results indicate that companies that have a change in their audit firm's issuing office exhibit a decrease in audit quality and an increase in audit fees. In additional analysis, we partition office changes into two groups—client driven changes and audit firm driven changes. This analysis reveals that client driven changes are more likely to result in a higher audit fee while audit quality is unchanged. Conversely, audit firm driven changes do not result in a higher audit fee but do experience a decrease in audit quality.

scholarly journals The Impact of the Amendment of Taiwan’s Certified Public Accountant Act in 2007 on Large Accounting Firms

2021 ◽  
Vol 13 (3) ◽  
pp. 1229
Author(s):  
Chung-Cheng Yang ◽  
Jianxiong Chen ◽  
Wen-Chi Yang
Keyword(s):  
Policy Implications ◽  
Certified Public Accountant ◽  
Accounting Firms ◽  
Survey Report ◽  
Audit Firms ◽  
Before And After ◽  
Theory Of Law ◽  
Revenue Function ◽  
The Impact ◽  
Public Accountant

Taiwan’s Financial Supervisory Commission of the Executive Yuan promulgated the fully amended Certified Public Accountant Act in 2007, which directly led to significant changes in accounting law. From the perspective of the economic theory of law, this study investigates the amendment of the Certified Public Accountant Act resulting in an increase or decrease in the overall revenue and different revenue shares of accounting firms, and puts forward measures that should be taken by accounting firms and stakeholders. We focus on large accounting firms and divide the sample period into before and after 2008. This study uses the translog revenue function and revenue share functions of the public accounting industry, and based on the 1989–2017 Survey Report of Audit Firms in Taiwan, and we find that the amendment of the Certified Public Accountant Act has had a positive effect on overall revenue, increasing overall revenue and the overall management advisory services shares, and in reducing the overall accounting and auditing shares and tax services shares of large accounting firms. Additional analyses provide regulators with public policy implications and provide accounting firms with managerial information.

Influences of Stress on Interactions with Decision Support

2020 ◽  
Vol 64 (1) ◽  
pp. 1886-1890
Author(s):  
Kylie Litaker ◽  
Christopher B. Mayhorn
Keyword(s):  
Decision Support ◽  
Information Source ◽  
Negative Influence ◽  
Future Research ◽  
Physiological Measures ◽  
Task Motivation ◽  
Situational Stress ◽  
Before And After ◽  
Scanning Task ◽  
Source Of Information

People regularly interact with automation to make decisions. Research shows that reliance on recommendations can depend on user trust in the decision support system (DSS), the source of information (i.e. human or automation), and situational stress. This study explored how information source and stress affect trust and reliance on a DSS used in a baggage scanning task. A preliminary sample of sixty-one participants were given descriptions for a DSS and reported trust before and after interaction. The DSS gave explicit recommendations when activated and participants could choose to rely or reject the choice. Results revealed a bias towards self-reliance and a negative influence of stress on trust, particularly for participants receiving help from automation. Controlling for perceived reliability may have eliminated trust biases prior to interaction, while stress may have influenced trust during the task. Future research should address potential differences in task motivation and include physiological measures of stress.

Acquiring variable commands at home and abroad: Examining optatives and imperatives in L1 and L2 Spanish

2020 ◽  
Vol 13 (1) ◽  
pp. 79-113
Author(s):  
Farrah Neumann ◽  
Matthew Kanwit
Keyword(s):  
Second Language ◽  
Second Language Acquisition ◽  
Study Abroad ◽  
Language Teaching ◽  
Applied Linguistics ◽  
Future Research ◽  
Control Group ◽  
Before And After ◽  
The Individual ◽  
At Home

AbstractSince many linguistic structures are variable (i. e. conveyed by multiple forms), building a second-language grammar critically involves developing sociolinguistic competence (Canale and Swain. 1980. Theoretical bases of communicative approaches to second language teaching and testing. Applied Linguistics 1(1). 1–47), including knowledge of contexts in which to use one form over another (Bayley and Langman. 2004. Variation in the group and the individual: Evidence from second language acquisition. International Review of Applied Linguistics in Language Teaching 42(4). 303–318). Consequently, researchers interested in such competence have increasingly analyzed the study-abroad context to gauge learners’ ability to approximate local norms following a stay abroad, due to the quality and quantity of input to which learners may gain access (Lafford. 2006. The effects of study abroad vs. classroom contexts on Spanish SLA: Old assumptions, new insights and future research directions. In Carol Klee & Timothy Face (eds.), Selected proceedings of the 7th conference on the acquisition of Spanish and Portuguese as first and second languages, 1–25. Somerville, MA: Cascadilla Proceedings Project). Nevertheless, the present study is the first to examine native or learner variation between imperative (e. g. ven ‘come’) and optative Spanish commands (e. g. que vengas ‘come’). We first performed a corpus analysis to determine the linguistic factors to manipulate in a contextualized task, which elicited commands from learners before and after four weeks abroad in Alcalá de Henares, Spain. Their overall rates of selection and predictive factors were compared to local native speakers (NSs) and a control group of at-home learners.Results revealed that the abroad learners more closely approached NS rates of selection following the stay abroad. Nonetheless, for both learner groups conditioning by independent variables only partially approximated the NS system, which was more complex than previously suggested.

How Collective-Action Failure Shapes Group Heterogeneity and Engagement in Conventional and Radical Action Over Time

2021 ◽  
pp. 095679762097056
Author(s):  
Morgana Lizzio-Wilson ◽  
Emma F. Thomas ◽  
Winnifred R. Louis ◽  
Brittany Wilcockson ◽  
Catherine E. Amiot ◽  
...  
Keyword(s):  
Social Movements ◽  
Collective Action ◽  
Latent Profile Analysis ◽  
Profile Analysis ◽  
Social Identification ◽  
Future Research ◽  
Group Efficacy ◽  
Before And After ◽  
Using Data ◽  
Over Time

Extensive research has identified factors influencing collective-action participation. However, less is known about how collective-action outcomes (i.e., success and failure) shape engagement in social movements over time. Using data collected before and after the 2017 marriage-equality debate in Australia, we conducted a latent profile analysis that indicated that success unified supporters of change ( n = 420), whereas failure created subgroups among opponents ( n = 419), reflecting four divergent responses: disengagement (resigned acceptors), moderate disengagement and continued investment (moderates), and renewed commitment to the cause using similar strategies (stay-the-course opponents) or new strategies (innovators). Resigned acceptors were least inclined to act following failure, whereas innovators were generally more likely to engage in conventional action and justify using radical action relative to the other profiles. These divergent reactions were predicted by differing baseline levels of social identification, group efficacy, and anger. Collective-action outcomes dynamically shape participation in social movements; this is an important direction for future research.

scholarly journals Stock Market Reaction to COVID-19: Evidence in Customer Goods Sector with the Implication for Open Innovation

2020 ◽  
Vol 6 (4) ◽  
pp. 99
Author(s):  
Zaky Machmuddah ◽  
St. Dwiarso Utomo ◽  
Entot Suhartono ◽  
Shujahat Ali ◽  
Wajahat Ali Ghulam
Keyword(s):  
Stock Prices ◽  
Stock Price ◽  
Practical Implication ◽  
Efficient Market Hypothesis ◽  
Future Research ◽  
Observation Data ◽  
Economic Sectors ◽  
Significant Difference ◽  
Before And After ◽  
Long Term Impact

The coronavirus pandemic has spread all over the world, affecting both the health and economic sectors. The aim of this research was to observe stock prices of customer goods before and after the COVID-19 pandemic using event study and the comparison test. The sample included data of daily closing stock prices and volume of stock trade during the three months before (−90 days) and after (+90 days) the occurrence of the COVID-19 pandemic ongoing, totaling 2670 observation data both before and after the COVID-19 pandemic, for a total of 5340. The research findings indicate a significant difference between the daily closing stock price and volume of stock trade before and after the COVID-19 pandemic. The current research has both theoretical and practical implications: the findings strengthen the efficient market hypothesis, which states that the more complete the provided information, the more efficient the market. The practical implication is that investors should be careful when choosing to invest. Investors should choose customer goods sector companies that provide products that are much needed by customers, for example, pharmacy, food, beverages, etc. Future research is needed to investigate the long-term impact of the pandemic on the economy.

Leaving a joint audit system: conditional fee reductions

2014 ◽  
Vol 29 (2) ◽  
pp. 131-152 ◽  
Author(s):  
Claus Holm ◽  
Frank Thinggaard
Keyword(s):  
Audit Quality ◽  
Theory Development ◽  
Future Research ◽  
Research Approach ◽  
Content Type ◽  
Audit Firm ◽  
Audit System ◽  
Interaction Terms ◽  
Audit Firms ◽  
Audit Fee

Purpose – The authors aim to exploit a natural experiment in which voluntary replace mandatory joint audits for Danish listed companies and analyse audit fee implications of using one or two audit firms. Design/methodology/approach – Regression analysis is used. The authors apply both a core audit fee determinants model and an audit fee change model and include interaction terms. Findings – The authors find short-term fee reductions in companies switching to single audits, but only where the former joint audit contained a dominant auditor. The authors argue that in this situation bargaining power is more with the auditors than in an equally shared joint audit, and that the auditors' incentives to offer an initial fee discount are bigger. Research limitations/implications – The number of observations is constrained by the small Danish capital market. Future research could take a more qualitative research approach, to examine whether the use of a single audit firm rather than two has an effect on audit quality. The area calls for further theory development covering audit fee and audit quality in joint audit settings. Practical implications – Companies should consider their relationship with their auditors before deciding to switch to single auditors. Fee discounts do not seem to reflect long-lasting efficiency gains on the part of the audit firm. Originality/value – Denmark is the first country to leave a mandatory joint audit system, so this is the first time that it is possible to study fee effects related to this.

Effects of a Low-Element Challenge Course on Abstinence Self-Efficacy and Group Cohesion

2011 ◽  
Vol 22 (2) ◽  
pp. 151-158 ◽  
Author(s):  
Jamie M. Clem ◽  
Thomas E. Smith ◽  
Kristin V. Richards
Keyword(s):  
Outcome Measures ◽  
Self Efficacy ◽  
Group Cohesion ◽  
Future Research ◽  
Chemically Dependent ◽  
Challenge Course ◽  
Self Confidence ◽  
Therapeutic Value ◽  
Before And After ◽  
Group Unity

Substance abuse researchers identify self-efficacy and group cohesion as important components in alcohol and other drug-dependency treatment. Objectives: The purpose of this single-group, pretest–posttest study is to explore the therapeutic value of a challenge course intervention on the self-efficacy and group cohesion of nine chemically dependent, adult females. Methods: Data were collected using two validated outcome measures administered before and after the intervention. Focus groups provided insight into the experiences of participants and were examined using manifest and latent theme analysis. Results: Findings indicate statistically significant improvements on both outcome measures with medium to large effect sizes. Several themes were identified including group unity, trust, interpersonal growth, and self-confidence. Conclusions: Suggestions for practice and future research are provided.

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