The Ties that Bind: Knowledge-Sharing Networks and Auditor Job Performance
51 Pages Posted: 12 Dec 2017 Last revised: 17 Apr 2020
Date Written: December 8, 2017
The dissemination of knowledge in audit firms is a critical process that has gone relatively unexamined by researchers. Using social network analysis to quantify the knowledge-seeking networks in a Big 4 audit firm in the U.S., we examine the association between the types and patterns of knowledge-seeking ties and individual auditor performance. Our initial finding is that auditor job performance is negatively associated with the number of knowledge-seeking ties. Further, our analyses demonstrate that this negative association is being driven by explicit knowledge-seeking rather than tacit knowledge-seeking activities and is stronger for higher-ranked auditors. Thus, knowledge-seeking by auditors may come at a cost, particularly when that knowledge is codifiable and when the seeking is done by those at higher levels of the firm. We also find that tacit knowledge sought from managers is beneficial for auditor performance, while tacit knowledge sought from senior managers and partners is detrimental, suggesting that who auditors seek knowledge from is important for performance. Our findings may assist researchers to better understand how auditors leverage their social connections to learn, which in turn may affect audit efficiency and effectiveness. Further, audit firms might benefit from better understanding the sources of useful knowledge and use it to make decisions that maximize desirable information flows.
Keywords: Social Networks, Knowledge-Sharing, Auditor Performance
JEL Classification: M42
Suggested Citation: Suggested Citation