Auditors’ Joint Engagements and Audit Quality: Evidence from Italian Private Companies
51 Pages Posted: 18 Sep 2015 Last revised: 10 Feb 2019
Date Written: May 22, 2017
This study examines the effect of auditors’ collaboration in joint audit engagements on knowledge transfer, auditor expertise, and audit outcomes. I employ a unique sample of Italian private companies whose financial statements are jointly audited by three individual auditors and use measures from the network literature to capture the intensity of interactions between these auditors. I find a positive association between several audit quality proxies and auditors’ collaboration in multiple joint engagements. My results suggest that auditors develop knowledge and contacts through collaboration which potentially leads to higher audit quality. Overall, my findings suggest that joint engagements facilitate knowledge transfer and increase auditor expertise.
Keywords: audit quality; auditors’ collaboration; joint audit; social networks analysis
JEL Classification: M43, M49
Suggested Citation: Suggested Citation