Auditing Multiple Public Clients, Partner-Client Tenure and Audit Quality

Abstract

We provide a partner level study on the association between auditing multiple public clients and audit quality. Using a sample of 10,876 Chinese firm-year observations for the years 2000-2009, we find that audit partners with more public clients are negatively associated with audit quality, consistent with the “busyness” effect that auditing multiple clients constrains audit partner effort and thus reduces audit quality. However, the negative association is significant only for auditors with short tenure, supporting the idea that the lack of client specific knowledge exacerbates the busyness effect. Collectively, these results contribute to our understanding of partner-level auditor behavior.

Keywords: multiple audit clients, auditor effort, client specific knowledge, audit quality

JEL Classification: M42