Design Issues in Studies on the Effect of Engagement Partner Identification on Audit Quality: Insight from a Natural Experiment

50 Pages Posted: 30 Sep 2019 Last revised: 1 Feb 2020

See all articles by Jean Bédard

Jean Bédard

Université Laval - École de comptabilité

Carl Brousseau

Université Laval - School of Accounting

Louis-Philippe Sirois

Université Laval - École de comptabilité

Date Written: January 30, 2020

Abstract

We exploit a 2008 regulatory change in a Canadian province to investigate the association between engagement partner identification (EPI) and audit quality (AQ) and to illustrate the implications of control group design choices on this association. In contrast to prior studies, firms in our treatment and control groups operated in the same institutional and economic environment throughout the period under study, reducing the likelihood of “contamination” of the EPI effect by confounding events and enabling its measurement over a longer period. We find no association between EPI and six AQ proxies when the treatment and control groups are restricted to economically similar firms, in contrast with the positive association documented in tests with inferior research designs. We conclude that EPI had no impact on AQ in our Canadian setting and we recommend that researchers proceed with caution when the treatment and control groups operate in different institutional or economic environments.

Keywords: engagement partner identification; audit quality; auditor's report; treatment and control groups

Suggested Citation

Bédard, Jean and Brousseau, Carl and Sirois, Louis-Philippe, Design Issues in Studies on the Effect of Engagement Partner Identification on Audit Quality: Insight from a Natural Experiment (January 30, 2020). Available at SSRN: https://ssrn.com/abstract=3456407 or http://dx.doi.org/10.2139/ssrn.3456407

Jean Bédard

Université Laval - École de comptabilité ( email )

2325, rue de la Terrasse
Québec, Québec G1V 0A6
Canada
418-656-7055 (Phone)
418-656-2624 (Fax)

Carl Brousseau (Contact Author)

Université Laval - School of Accounting ( email )

Quebec City
Canada

Louis-Philippe Sirois

Université Laval - École de comptabilité ( email )

Quebec City
Canada

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