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

53 Pages Posted: 3 Oct 2012 Last revised: 31 Jan 2014

See all articles by Ferdinand A. Gul

Ferdinand A. Gul

Monash University Sunway Campus

Mark (Shuai) Ma

University of Pittsburgh - Katz Graduate School of Business

Karen Lai

Monash University - Department of Accounting; Deakin University, Faculty of Business and Law, Deakin Law School, Students

Date Written: October 3, 2012

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

Suggested Citation

Gul, Ferdinand A. and Ma, Mark (Shuai) and Lai, Karen, Auditing Multiple Public Clients, Partner-Client Tenure and Audit Quality (October 3, 2012). Available at SSRN: https://ssrn.com/abstract=2156399 or http://dx.doi.org/10.2139/ssrn.2156399

Ferdinand A. Gul

Monash University Sunway Campus ( email )

Jalan Lagoon Selatan
Selangor Darul Ehsan
Bandar Sunway, 46150
Malaysia

Mark (Shuai) Ma (Contact Author)

University of Pittsburgh - Katz Graduate School of Business ( email )

Pittsburgh, PA 15260
United States

Karen Lai

Monash University - Department of Accounting ( email )

H3.43, Building H, Level 3
Monash University Caulfiled
Melbourne, VIC 3145
Australia

Deakin University, Faculty of Business and Law, Deakin Law School, Students ( email )

221 Burwood Highway
Burwood, Victoria
Australia

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