Archival Research on Audit Partners: Assessing the Research Field and Recommendations for Future Research

Accounting & Finance, Forthcoming

51 Pages Posted: 9 Jan 2021

See all articles by Kris Hardies

Kris Hardies

University of Antwerp

Sarowar Hossain

University of New South Wales (UNSW)

Larelle Law Chapple

QUT School of Business; Financial Research Network (FIRN)

Date Written: November 4, 2020

Abstract

In this paper, we assess the existing archival research on audit partners and provide recommendations for future research. Our empirical analyses suggest that the audit partner characteristics with the biggest impact are industry specialization and client importance. We demonstrate that audit partner studies may suffer from omitted variable bias if they study audit partner characteristics in isolation, as they have often done. We also show that for most audit partner characteristics there is little within-company and within-partner variation. We therefore caution against routinely including company and audit partner fixed effects in audit partner studies. We also examine the importance of properly adjusting for dependence in the data in audit partner studies and suggest to cluster standard errors at the client firm level. Finally, we provide detailed descriptive information at the audit partner level in order to demonstrate how researchers could improve the reporting of audit partner level data.

Keywords: audit partners, endogeneity, fixed effects, clustering, gender, experience, industry specialization, tenure, client importance, portfolio size

JEL Classification: M42

Suggested Citation

Hardies, Kris and Hossain, Sarowar and Law Chapple, Larelle, Archival Research on Audit Partners: Assessing the Research Field and Recommendations for Future Research (November 4, 2020). Accounting & Finance, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3724917 or http://dx.doi.org/10.2139/ssrn.3724917

Kris Hardies

University of Antwerp ( email )

Department of Accounting and Finance
Pleinlaan 13
Antwerp, 2000
Belgium

Sarowar Hossain

University of New South Wales (UNSW) ( email )

Kensington
High St
Sydney, NSW 2052
Australia

Larelle Law Chapple (Contact Author)

QUT School of Business ( email )

GPO Box 2434
Brisbane, Queensland 4001
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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