Audit Partners’ Co-Working Experience and Audit Outcomes

69 Pages Posted: 5 Sep 2019

See all articles by Ting‐Chiao Huang

Ting‐Chiao Huang

Monash University

Chen Chen

Monash University - Department of Accounting

Steven E. Kaplan

Arizona State University

Yi-Hung Lin

Monash University

Date Written: August 28, 2019

Abstract

Issues related to audit team personnel and the resultant effects on audit outcomes have not been investigated widely with archival data due to data unavailability. In this study, we examine whether and how increases in co-working experience between the lead and the concurring partners impact engagement audit quality and audit efficiency. A priori, increases in co-working experience could increase or decrease audit quality. In contrast, we expect increases in co-working experience will increase audit efficiency. Using a unique setting, Taiwan, where the identities of these two partners are known, we find increases in co-working experience are positively associated with audit quality and audit efficiency. Our results are robust to alternative measures of co-working experience and audit quality and to controlling for potentially omitted variables and selection bias. Further tests show that the effects of co-working experience on audit quality and audit efficiency are more pronounced when client audit risk is higher, the audit firm is not an industry expert, audit firm tenure is relatively shorter, and the two audit partners more consistently serve in only one role.

Keywords: audit partner co-working experience; audit quality; audit efficiency; audit tenure; audit industry expert

JEL Classification: M4; M42

Suggested Citation

Huang, Ting-Chiao and Chen, Chen and Kaplan, Steven E. and Lin, Yi-Hung Jerry, Audit Partners’ Co-Working Experience and Audit Outcomes (August 28, 2019). Available at SSRN: https://ssrn.com/abstract=3444054 or http://dx.doi.org/10.2139/ssrn.3444054

Ting-Chiao Huang (Contact Author)

Monash University ( email )

23 Innovation Walk
Wellington Road
Clayton, Victoria 3800
Australia

Chen Chen

Monash University - Department of Accounting ( email )

Building H, Level 3
Caulfield campus
Melbourne, Victoria 3800
Australia

Steven E. Kaplan

Arizona State University ( email )

Tempe, AZ 85287
United States
602-965-6498 (Phone)
602-965-8392 (Fax)

Yi-Hung Jerry Lin

Monash University ( email )

23 Innovation Walk
Wellington Road
Clayton, Victoria 3800
Australia

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