What’s in a Name? Initial Evidence of U.S. Audit Partner Identification Using Difference-in-Differences Analyses

64 Pages Posted: 9 Nov 2018

See all articles by Lauren M. Cunningham

Lauren M. Cunningham

University of Tennessee - Haslam College of Business

Chan Li

University of Pittsburgh - Katz Graduate School of Business

Sarah E. Stein

Virginia Tech

Nicole Wright

James Madison University

Date Written: October 16, 2018

Abstract

We investigate changes in the quality and cost of audit services surrounding PCAOB Rule 3211, which requires disclosure of audit partner names in Form AP. To isolate changes due to Rule 3211 from other confounding factors, we use difference-in-differences analyses with separate control groups, including a group of companies that disclosed partner identities prior to Rule 3211. Our study also incorporates several measures from prior literature to proxy for various dimensions of audit quality. Evidence from the difference-in-differences analyses reveals that any immediate impact of Rule 3211 on audit quality or fees is limited to specific dimensions of audit quality, specific control groups, and/or specific company characteristics. We reach this conclusion after considering alternative research designs and evaluating confidence intervals for statistically insignificant coefficients. We caution that our findings only provide initial evidence and further research is necessary to evaluate other potential impacts of Rule 3211.

Keywords: PCAOB, Rule 3211, Form AP, audit partner, audit quality, audit fees, difference-in-differences

JEL Classification: M42

Suggested Citation

Cunningham, Lauren M. and Li, Chan and Stein, Sarah E. and Wright, Nicole, What’s in a Name? Initial Evidence of U.S. Audit Partner Identification Using Difference-in-Differences Analyses (October 16, 2018). The Accounting Review, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3267624

Lauren M. Cunningham

University of Tennessee - Haslam College of Business ( email )

Accounting and Information Management
603 Stokely Management Center
Knoxville, TN 37996
United States

Chan Li

University of Pittsburgh - Katz Graduate School of Business ( email )

135 N Bellefield Ave
Pittsburgh, PA 15260
United States

Sarah E. Stein (Contact Author)

Virginia Tech ( email )

Blacksburg, VA 24061
United States

Nicole Wright

James Madison University ( email )

Harrisonburg, VA 22807
United States

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