The Importance of Audit Partners’ Risk Tolerance to Audit Quality

70 Pages Posted: 8 Jan 2019 Last revised: 23 Nov 2022

See all articles by Jeffrey Pittman

Jeffrey Pittman

Memorial University ; Virginia Tech

Sarah E. Stein

Virginia Tech

Delia F. Valentine

University of Wisconsin - Milwaukee

Date Written: October 31, 2022


Relying on their history of legal infractions to measure individuals’ risk tolerance, we examine the association between engagement partners’ risk appetites and audit quality in the U.S. Criminology and economics research links infraction activity with enduring personality traits that capture an individual’s risk tolerance. Our evidence supports the prediction that partners known to engage in risky off-the-job behaviors conduct lower quality audits. Specifically, we find that clients of partners with prior legal infractions exhibit a higher likelihood of material misstatements revealed through subsequent restatements, greater propensity to misstate based on the F-score, fewer material weaknesses, more instances of “missed” material weaknesses, and less timely loss recognition, while also paying lower audit fees. We also document that risk-tolerant partners are more likely to pursue alternative sources of benefit by attracting larger non-audit fees from their audit clients. Reflecting that Big 4 firms have robust quality control systems and more standardized audit procedures that narrow the scope for partner characteristics to matter, we generally find that the negative association between risk-tolerant partners and audit quality is isolated in non-Big 4 clients. In additional cross-sectional analyses, we find some supportive evidence that the impact of partners’ risk tolerance on audit quality is concentrated in offices without industry expertise, and offices located in a different city than the SEC. Collectively, our analysis contributes to emerging research on the role that individual partner characteristics play in shaping audit outcomes.

Keywords: audit partner, audit quality, risk tolerance, legal infractions

JEL Classification: M40, M42, K42

Suggested Citation

Pittman, Jeffrey A. and Stein, Sarah E. and Valentine, Delia F., The Importance of Audit Partners’ Risk Tolerance to Audit Quality (October 31, 2022). Available at SSRN: or

Jeffrey A. Pittman

Memorial University ( email )

St. John's, Newfoundland A1B 3X5
709-737-3100 (Phone)
709-737-7680 (Fax)

Virginia Tech ( email )

United States

Sarah E. Stein (Contact Author)

Virginia Tech ( email )

250 Drillfield Drive
Blacksburg, VA 24061
United States

Delia F. Valentine

University of Wisconsin - Milwaukee ( email )

3202 N Maryland Ave
Milwaukee, WI 53202
United States

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