Employee Satisfaction in Accounting Firms, Work-Life Balance, Turnover, and Audit Quality
59 Pages Posted: 5 Jan 2018 Last revised: 23 Feb 2018
Date Written: December 21, 2017
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: Suggested Citation