Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

Employing string similarity metrics of partners to estimate audit team continuity: determinant and its effects on audit outcomes and pricing

Employing string similarity metrics of partners to estimate audit team continuity: determinant... Partners are responsible for allocating audit tasks and facilitating knowledge sharing among team members. This study considers changes in the composition of partners to proxy for the continuity of the audit team. This study examines the effect of audit team continuity on audit outcomes (audit quality and report lags), pricing and its determinant (lead partner experience), which have not been thoroughly examined in previous studies.Design/methodology/approachThis study employs string similarity metrics to measure audit team continuity. The study employs multivariate panel data regression empirical models to estimate a sample of 26,007 firm-years of listed Japanese companies from 2008 to 2019.FindingsThe study reveals that audit team continuity is negatively associated with audit fees, regardless of the auditor’s size. This finding contributes to the existing literature by showing that audit team continuity represents one of the determinant factors of audit fee. For clients of large audit firms, companies with higher (lower) audit team continuity issue audit reports in less (more) time. The experience of lead partners is a strong predictor of audit team continuity, irrespective of audit firm size. Audit quality is not associated with audit team continuity for either large or small audit firms.Originality/valueThis study proposes and examines audit team continuity measures that employ string similarity metrics to quantify changes in the composition of partners in consecutive audit engagements. Audit team continuity expands upon the tenure of individual audit partners, which is commonly used in prior literature as a measure of client–partner relationships. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Accounting Literature Emerald Publishing

Employing string similarity metrics of partners to estimate audit team continuity: determinant and its effects on audit outcomes and pricing

Journal of Accounting Literature , Volume 45 (2): 26 – Apr 14, 2023

Loading next page...
 
/lp/emerald-publishing/employing-string-similarity-metrics-of-partners-to-estimate-audit-team-a3Tg3D8dxr

References (82)

Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
0737-4607
eISSN
2452-1469
DOI
10.1108/jal-02-2022-0026
Publisher site
See Article on Publisher Site

Abstract

Partners are responsible for allocating audit tasks and facilitating knowledge sharing among team members. This study considers changes in the composition of partners to proxy for the continuity of the audit team. This study examines the effect of audit team continuity on audit outcomes (audit quality and report lags), pricing and its determinant (lead partner experience), which have not been thoroughly examined in previous studies.Design/methodology/approachThis study employs string similarity metrics to measure audit team continuity. The study employs multivariate panel data regression empirical models to estimate a sample of 26,007 firm-years of listed Japanese companies from 2008 to 2019.FindingsThe study reveals that audit team continuity is negatively associated with audit fees, regardless of the auditor’s size. This finding contributes to the existing literature by showing that audit team continuity represents one of the determinant factors of audit fee. For clients of large audit firms, companies with higher (lower) audit team continuity issue audit reports in less (more) time. The experience of lead partners is a strong predictor of audit team continuity, irrespective of audit firm size. Audit quality is not associated with audit team continuity for either large or small audit firms.Originality/valueThis study proposes and examines audit team continuity measures that employ string similarity metrics to quantify changes in the composition of partners in consecutive audit engagements. Audit team continuity expands upon the tenure of individual audit partners, which is commonly used in prior literature as a measure of client–partner relationships.

Journal

Journal of Accounting LiteratureEmerald Publishing

Published: Apr 14, 2023

Keywords: Audit quality; Audit pricing; Audit report lags; Partner experience

There are no references for this article.