Audit Partner Assignments and Audit Quality in the United States
54 Pages Posted: 21 Aug 2016 Last revised: 14 Jul 2018
Date Written: June 11, 2018
This paper examines the demand and supply side factors associated with audit partner selection and assignment in the United States. First, we examine whether audit partner gender and experience are associated with board and management gender and experience. Second, we investigate whether engagement audit quality varies with audit partner gender and experience, controlling for selection effects. The results indicate that companies with more gender-diverse boards of directors and top management teams are more likely to have a female lead audit partner. In addition, the experience of the client’s board is positively associated with the experience of the lead audit partner. In terms of audit quality, we find that higher audit fees are positively associated with female and more experienced audit partners. The results also provide weak evidence that audit partner gender is associated with audit quality as measured by abnormal accruals and restatements. We do not find an association between partner experience and audit quality. Our results shed light on the important role that partner characteristics play in the demand and supply side of audit quality. Partner characteristics also have implications for future research on the audit assignment process in the U.S., particularly in light of the new availability of audit partner identities in the PCAOB Form AP filings.
Keywords: Audit Partner Experience, Audit Partner Gender, Audit Fees, Audit Quality
JEL Classification: M42
Suggested Citation: Suggested Citation