Employee Satisfaction in Accounting Firms, Work-Life Balance, Turnover, and Audit Quality

59 Pages Posted: 5 Jan 2018 Last revised: 23 Feb 2018

See all articles by Joshua Khavis

Joshua Khavis

Temple University - Department of Accounting

Jagan Krishnan

Temple University - Department of Accounting

Date Written: December 21, 2017

Abstract

The PCAOB’s audit-quality framework dictates that superior inputs are essential for achieving high audit quality. Accounting firms’ input quality rests on their ability to maintain certain levels of employee satisfaction. We use employee-level reviews to identify the determinants of employee satisfaction at accounting firms, and show how internal firm characteristics explain audit quality. We find that “career opportunities,” “senior management,” and “culture and values” play a more important role in employees’ satisfaction than “compensation and benefits” or “work–life balance” does. We also find that work–life balance is associated with audit quality but find no strong link between audit-employee satisfaction and audit quality. Our findings suggest that although work–life balance is not important for audit employees’ satisfaction, improving work–life balance may nonetheless improve audit quality. Finally, we find some evidence that higher audit-employee retention is related to higher audit quality for Big 4 clients.

Keywords: audit quality, audit quality indicators, audit quality framework, firm culture, employee satisfaction, work–life balance, employee turnover

JEL Classification: M42

Suggested Citation

Khavis, Joshua and Krishnan, Jagan, Employee Satisfaction in Accounting Firms, Work-Life Balance, Turnover, and Audit Quality (December 21, 2017). Available at SSRN: https://ssrn.com/abstract=3095057 or http://dx.doi.org/10.2139/ssrn.3095057

Joshua Khavis (Contact Author)

Temple University - Department of Accounting ( email )

Philadelphia, PA 19122
United States

Jagan Krishnan

Temple University - Department of Accounting ( email )

Fox School of Business & Management
1801 Liacorous Walk
Philadelphia, PA 19122
United States
215-204-8126 (Phone)
215-204-5587 (Fax)

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