Are Joint Audits a Proper Instrument for Increased Audit Quality?

British Journal of Applied Science & Technology, Forthcoming

Posted: 22 Feb 2016

See all articles by Jamel Azibi

Jamel Azibi

Law Faculty, Management and Economics Science of Jendouba

Patrick Velte

Leuphana University of Lueneburg

Date Written: February 4, 2015

Abstract

Joint audits are recently controversial discussed to increase audit quality and decrease audit market concentration in Europe, complementing the existing and future rotation rules by the 8th EC directive. First, this article presents a theoretical foundation of joint audits. In this context, the main influences on low balling are presented. The link between joint audits and audit quality is still controversial. Then, the main results of empirical research on joint audit are focused. A clear positive link between joint audits and audit quality cannot be found, but there is strong evidence for higher audit costs which could lead to an increased price competition. Insofar, a lower audit market concentration by joint audits is not generally connected with higher audit quality, because there are many corporate governance interactions. To test this hypothesis, we use a sample of 306 Germany and French companies between 2008 and 2012. Empirical results demonstrate unclear effect of the joint audit on audit quality in these two countries.

Keywords: External Audit; Joint Audit; Audit Quality; Earnings Management

JEL Classification: M4

Suggested Citation

Azibi, Jamel and Velte, Patrick, Are Joint Audits a Proper Instrument for Increased Audit Quality? (February 4, 2015). British Journal of Applied Science & Technology, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2735826

Jamel Azibi

Law Faculty, Management and Economics Science of Jendouba ( email )

Ghardimaou 8160
Tunisia

Patrick Velte (Contact Author)

Leuphana University of Lueneburg ( email )

Scharnhorststra├če 1
L├╝neburg, 21335
Germany

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
1,264
PlumX Metrics