Audit Firm Employee Job Satisfaction and Audit Quality: Evidence at the Big 4 Office Level
Posted: 24 Oct 2017 Last revised: 25 Aug 2018
Date Written: October 23, 2017
We examine the association between job satisfaction in audit offices and office-level audit quality. Using employee self-assessments of satisfaction with their work at Big 4 audit offices between 2008 and 2016, we find that job satisfaction is positively associated with audit quality. We show that audit offices with higher employee satisfaction, especially satisfaction with work-life balance, perform higher quality audits in that their clients report lower discretionary accruals, experience a lower propensity of misstatement, and relate to a lower likelihood of an undisclosed material weakness. Further, we find that the positive effects of audit office employee satisfaction are mainly applicable to non-manager employees (vis-à-vis managers, partners, and directors). Our study sheds light on how employee job satisfaction contributes to better performance in the auditing profession.
Keywords: Job Satisfaction, Audit Quality, SEC Regulation
JEL Classification: J28, M41, M42
Suggested Citation: Suggested Citation