Differences in Auditing Practices - A Comparative Study of Audit Tenure Effects on Audit Quality between Germany and the United States

HHL Working Paper Series No. 129

21 Pages Posted: 3 Dec 2011 Last revised: 31 Jan 2014

See all articles by Patrick Krauss

Patrick Krauss

Handelshochschule Leipzig (HHL)

Benedikt Quosigk

University of Texas at San Antonio

Henning Zülch

HHL Leipzig Graduate School of Management

Date Written: December 3, 2011

Abstract

Using a matched sample of 1,806 firm-year observations from Germany and the United States over the sample period of 2005 to 2010, this paper examines audit practice differences between both countries. Our empirical results show qualitative similar results with regard to audit tenure effects on audit quality in Germany and the United States. The results imply that the increased process of accounting and audit harmonization worldwide have led to quite some similarities in auditing practices, respectively audit regulations. However, our empirical results also imply that beside specific audit regulation requirements, the auditing practices in Germany and the United States still differ significantly. In particular, we are able to detect generally higher levels of earnings management for German companies than their matched counterparts from the United States. Our results are robust to a variety of sensitivity tests.

Keywords: Auditing Practices, Audit Quality, Audit Engagement Tenure, Auditor Independence, German Audit Market, United States Audit Market

JEL Classification: M41

Suggested Citation

Krauss, Patrick and Quosigk, Benedikt and Zülch, Henning, Differences in Auditing Practices - A Comparative Study of Audit Tenure Effects on Audit Quality between Germany and the United States (December 3, 2011). HHL Working Paper Series No. 129. Available at SSRN: https://ssrn.com/abstract=1967454 or http://dx.doi.org/10.2139/ssrn.1967454

Patrick Krauss (Contact Author)

Handelshochschule Leipzig (HHL) ( email )

Jahnallee 59
Leipzig, D-04109
Germany
0049-341-9851-701 (Phone)
0049-341-9851-702 (Fax)

HOME PAGE: http://www.hhl.de/faculty-research/faculty/accounting-and-auditing/

Benedikt Quosigk

University of Texas at San Antonio ( email )

One UTSA Circle
San Antonio, TX 78249
United States

Henning Zülch

HHL Leipzig Graduate School of Management ( email )

Jahnallee 59
Leipzig, Saxony D-04109
Germany
+49(341)9851701 (Phone)
+49(341)9851702 (Fax)

HOME PAGE: http://www.hhl.de/faculty-research/faculty/accounting-auditing/

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