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http://ssrn.com/abstract=1304953
 
 

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The Effects of Audit Partner Pre-Client and Client-Specific Experience on Audit Quality and on Perceptions of Audit Quality


Wuchun Chi


National Chengchi University (NCCU) - Department of Accounting

Linda A. Myers


University of Tennessee, Knoxville

Thomas C. Omer


University of Nebraska at Lincoln - School of Accountancy

Hong Xie


University of Kentucky - Von Allmen School of Accountancy

January 2016


Abstract:     
Based on O’Keefe et al. (1994), which models audit quality as a function of general knowledge, client-specific knowledge, and other factors, we examine the association between audit partner experience and audit quality. We use data from Taiwan, where the names of signing audit partners are disclosed, to determine pre-client experience (a proxy for general knowledge) and client-specific experience (a proxy for client-specific knowledge), and we use discretionary accruals and interest rate spreads to proxy for audit quality and perceptions of audit quality, respectively. We find that audit partner pre-client experience is positively associated with audit quality early in the audit engagement, but not when the audit partner has been with the client for at least 5 years. Moreover, we find that both pre-client and client-specific experience improve creditor perceptions of audit quality. Our findings are important because they provide evidence consistent with the assumption underlying the Public Company Accounting Oversight Board’s decision to require the disclosure of engagement partner names for U.S. audit engagements and because they provide evidence that an incoming audit partner’s pre-client experience cannot completely mitigate the loss of the outgoing audit partner’s client-specific knowledge when partner or audit firm rotation or turnover occurs.

Number of Pages in PDF File: 46

Keywords: Audit Partner Experience, Audit Quality

JEL Classification: M49, M41, M43, M47, G12


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Date posted: November 21, 2008 ; Last revised: January 6, 2016

Suggested Citation

Chi, Wuchun and Myers, Linda A. and Omer, Thomas C. and Xie, Hong, The Effects of Audit Partner Pre-Client and Client-Specific Experience on Audit Quality and on Perceptions of Audit Quality (January 2016). Available at SSRN: http://ssrn.com/abstract=1304953 or http://dx.doi.org/10.2139/ssrn.1304953

Contact Information

Wuchun Chi
National Chengchi University (NCCU) - Department of Accounting ( email )
No. 64, Sec 2
Chih-Nan Road
Wenshan 116, Taipei
Taiwan
886-2-29393091-81031 (Phone)
886-2-29387113 (Fax)
HOME PAGE: http://www3.nccu.edu.tw/~wchi/
Linda A. Myers (Contact Author)
University of Tennessee, Knoxville ( email )
Haslam Business Building
Knoxville, TN
United States
Thomas C. Omer
University of Nebraska at Lincoln - School of Accountancy ( email )
307 College of Business Administration
Lincoln, NE 68588-0488
United States
Hong Xie
University of Kentucky - Von Allmen School of Accountancy ( email )
Lexington, KY 40506
United States
(859) 257-4648 (Phone)
(859) 257-3654 (Fax)
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