Audit Partner Public-Client Specialisation and Client Abnormal Accruals
Bibliographic Data
| ID | 19447540 |
|---|---|
| Authors | Kim Ittonen (0000-0002-2917-4077, University of Vaasa), Karla Johnstone, Karla M Johnstone (0000-0002-3128-1656, University of Wisconsin–Madison, corresponding author), Emma-Riikka Myllymäki, Emma‐Riikka Myllymäki (0000-0002-0610-0577, University of Vaasa) |
| Year | 2015 |
| Volume | 24 |
| Issue | 3 |
| Pages | 607-633 |
| Publication date | 2015-07-03 |
| Open Access | No |
| Type | ARTICLE |
| Venue | European Accounting Review (JOURNAL) |
| Journal identifiers | ISSN: 0963-8180 • E-ISSN: 1468-4497 |
| Publisher | Informa UK Limited (PUBLISHER • GB) |
| DOI | 10.1080/09638180.2014.906315 |
| OpenAlex | W3124559716 |
| Language | EN |
| Citations received | 1 |
| References cited | 56 |
We examine the association of Big 4 audit partners’ public-client specialisation with client companies’ audit quality. Using a sample of NASDAQ OMX companies in Finland, we identify the audit partner assigned to each public-client engagement. We expect that partners with greater public-client specialisation provide higher quality auditing, since they have likely developed deep domain-specific knowledge and a keen sense of the litigation and reputational risks posed by public clients. In addition, the willingness to resist client pressure likely increases with the number of public clients in the partner's portfolio because dependence on any one client diminishes, which should help to ensure audit quality. The results show that public-client specialisation is negatively associated with abnormal accruals, and this result is attributable to audit partners with three to six public clients. The results of supplemental tests imply that public-client specialisation is more important when general auditing experience is lower. Further, the results reveal that in our setting of high-tax and high alignment between financial reporting and tax reporting, greater public-client specialisation is particularly associated with smaller income-decreasing abnormal accruals, suggesting that auditors with greater public-client specialisation likely recognise the downside reputational implications and achieve audit quality by discouraging tax avoidance
Accrual · Audit · Business · Internal audit · Joint audit · Quality audit · Auditing, Earnings Management, Governance · Corporate Taxation and Avoidance · Taxation and Compliance Studies · Accounting
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| Citations per year | 0.33 |
|---|---|
| Citation span | 2023 - 2023 (1) |
| Highly cited | No |