Audit Firm Governance: Do Transparency Reports Reveal Audit Quality?

36 Pages Posted: 20 May 2011 Last revised: 30 May 2012

See all articles by Rogier Deumes

Rogier Deumes

Maastricht University - Department of Accounting & Information Management, MARC (Maastricht Accounting, Auditing & Information Management Research Center)

Caren Schelleman

Maastricht University - Department of Accounting & Information Management, MARC (Maastricht Accounting, Auditing & Information Management Research Center)

Heidi Vander Bauwhede

Ghent University - Faculty of Economics and Business Administration

Ann Vanstraelen

Maastricht Accounting and Auditing Research and Education Center (MARC); Maastricht University

Date Written: May 19, 2011

Abstract

As a result of legal and regulatory requirements, audit firms in certain jurisdictions have recently started issuing transparency reports containing information on audit firm governance. In this study we investigate whether audit firm governance disclosure is associated with actual audit quality. Based on a sample of transparency reports of 103 audit firms in a number of EU countries, we find that there is variation in the extent and type of governance disclosures across audit firms. We, however, do not find an association with actual audit quality, apart from a weak association with an audit firm’s statement on the effectiveness of its internal quality control system.

Keywords: Corporate governance, audit firm, transparency report

JEL Classification: M42

Suggested Citation

Deumes, Rogier and Schelleman, Caren and Vander Bauwhede, Heidi and Vanstraelen, Ann, Audit Firm Governance: Do Transparency Reports Reveal Audit Quality? (May 19, 2011). Auditing: A Journal of Practice & Theory, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1847924 or http://dx.doi.org/10.2139/ssrn.1847924

Rogier Deumes

Maastricht University - Department of Accounting & Information Management, MARC (Maastricht Accounting, Auditing & Information Management Research Center) ( email )

P.O. Box 616
Maastricht, 6200 MD
Netherlands

Caren Schelleman

Maastricht University - Department of Accounting & Information Management, MARC (Maastricht Accounting, Auditing & Information Management Research Center) ( email )

PO Box 616
Maastricht, 6200 MD
Netherlands

Heidi Vander Bauwhede

Ghent University - Faculty of Economics and Business Administration ( email )

Ghent, B-9000
Belgium

Ann Vanstraelen (Contact Author)

Maastricht Accounting and Auditing Research and Education Center (MARC) ( email )

P.O. Box 616
Maastricht, 6200 MD
Netherlands

Maastricht University ( email )

P.O. Box 616
Maastricht, 6200MD
Netherlands

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