Auditor Workload Compression and Busy Season Auditor Switching

Posted: 27 Jan 2017

See all articles by Dennis M. Lopez

Dennis M. Lopez

University of Texas at San Antonio

Gary F. Peters

University of Arkansas at Fayetteville

Date Written: June 2011

Abstract

This study investigates the impact of the busy season and concomitant concentrated demands on audit resources on the likelihood of auditor switching. Hereafter, we refer to the concentration of companies with the same fiscal year-end date within an auditor's client portfolio as “workload compression.” Despite the economic significance of December year-end clients for audit firms and the challenges imposed by workload compression, the busy season remains a relatively unexplored area of study in the archival auditing literature (Sweeney and Summers 2002). This study represents an attempt to fill this void and validate some of the findings of prior behavioral studies from an empirical perspective. We employ a sample of 10,238 company-year observations for years 2004 through 2007 and find evidence consistent with December year-end companies having a lower likelihood of auditor switching than that of non-December year-end companies. However, we also find evidence of a significantly positive association between the likelihood of auditor switching and workload compression. Thus, our results suggest that it is not just the fiscal year-end month of a client that matters, but the concentration of busy season companies within an auditor's client portfolio also affects the auditor-client relationship.

Keywords: Auditor Switching, Busy Season, December Year-End, Workload Compression

JEL Classification: M40, M42, M42, M49

Suggested Citation

Lopez, Dennis M. and Peters, Gary F., Auditor Workload Compression and Busy Season Auditor Switching (June 2011). Accounting Horizons, Vol. 25, No. 2, 2011. Available at SSRN: https://ssrn.com/abstract=2906492

Dennis M. Lopez (Contact Author)

University of Texas at San Antonio ( email )

One UTSA Circle
San Antonio, TX 78249
United States
210-458-4320 (Phone)
210-458-4322 (Fax)

HOME PAGE: http://business.utsa.edu/

Gary F. Peters

University of Arkansas at Fayetteville ( email )

Sam M. Walton College of Business
Department of Accounting
Fayetteville, AR 72701

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