Why Do Certain Engagement Partners Exhibit a Pattern of Poor Audit Quality? The Impact of Partner Workloads and Client Fee Pressures

49 Pages Posted: 8 Sep 2017 Last revised: 20 Mar 2019

See all articles by Wuchun Chi

Wuchun Chi

National Chengchi University (NCCU) - Department of Accounting

Ling Lei Lisic

Virginia Polytechnic Institute & State University - Pamplin College of Business

Linda A. Myers

University of Tennessee, Haslam College of Business, Accounting and Information Management

Mikhail Pevzner

University of Baltimore - Merrick School of Business

Timothy A. Seidel

Brigham Young University

Date Written: March 1, 2019

Abstract

Using data from Taiwan where a long history of engagement partner identities are available, we investigate why certain engagement partners exhibit a pattern of poor audit quality. Holding important engagement partner and client characteristics constant, we continue to find evidence of lower audit quality among engagement partners who have recently exhibited lower audit quality; this suggests that patterns of poor audit quality are not solely a function of partner experience or of clienteles. We examine two additional explanations for this phenomenon – engagement partner workloads and client fee pressures. We find that both partner workloads and increased fee pressure from previously non-restating clients contribute to this pattern of poor audit quality. These findings provide important new insights into why certain partners exhibit a pervasive tendency to provide lower quality audits.

Keywords: audit quality, engagement partners, financial statement misstatements, partner workloads, audit fee pressure

JEL Classification: M41, M42

Suggested Citation

Chi, Wuchun and Lisic, Ling Lei and Myers, Linda A. and Pevzner, Mikhail and Seidel, Timothy A., Why Do Certain Engagement Partners Exhibit a Pattern of Poor Audit Quality? The Impact of Partner Workloads and Client Fee Pressures (March 1, 2019). Available at SSRN: https://ssrn.com/abstract=3032610 or http://dx.doi.org/10.2139/ssrn.3032610

Wuchun Chi

National Chengchi University (NCCU) - Department of Accounting ( email )

No. 64, Sec 2
Chih-Nan Road
Wenshan 116, Taipei
Taiwan
886-2-29393091-81031 (Phone)
886-2-29387113 (Fax)

HOME PAGE: http://www3.nccu.edu.tw/~wchi/

Ling Lei Lisic

Virginia Polytechnic Institute & State University - Pamplin College of Business ( email )

1016 Pamplin Hall
Blacksburg, VA 24061
United States

Linda A. Myers

University of Tennessee, Haslam College of Business, Accounting and Information Management ( email )

Knoxville, TN
United States

Mikhail Pevzner

University of Baltimore - Merrick School of Business ( email )

1420 N. Charles St.
Baltimore, MD 21201-5779
United States

Timothy A. Seidel (Contact Author)

Brigham Young University ( email )

Provo, UT 84602
United States

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