Auditor distraction and audit quality

IF 3.6 Q1 BUSINESS, FINANCE
C. Chang, Yutao Li, Yan Luo
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引用次数: 0

Abstract

Purpose The purpose of this study is to examine how auditors would react when there are exogenous negative shocks to their client portfolios. Design/methodology/approach Using a sample of 31,256 firm-year observations (2001–2016), the authors investigate whether industry shocks to a subset of an auditor’s clients distract the auditor and affect the professional skepticism applied in the audits of other clients. Findings The authors find that clients of distracted auditors are more likely to meet or beat analyst consensus forecasts, suggesting that auditors’ professional skepticism is compromised by distractive events. The cross-sectional analyses reveal that the negative impact of the distractive events on audit quality is more pronounced when the distracted auditors audit less important clients, face lower third-party legal liabilities and experience higher growth. Using an alternative measure of audit quality, the additional analysis shows that clients of distracted auditors exhibit a higher probability of restating their earnings in subsequent years. Overall, the empirical evidence suggests that when distracted, auditors render lower quality audit. Originality/value The study complements recent work by Cassell et al. (2019), which shows that the 2008–2009 financial crisis affected the quality of the audits of nonbank clients of bank-specialized auditors. While Cassell et al. (2019) focus on one shock (financial crisis) to one industry (i.e. the financial services industry), the study examines more frequent shocks over a wide range of industries to identify the potential effects of distractive events, improving the generalizability of the findings to all industries and all auditors (specialist and nonspecialist) in nonrecession periods.
审计师分心与审计质量
目的本研究的目的是考察当客户投资组合受到外部负面冲击时,审计师会如何反应。设计/方法/方法使用31256个公司年度观察(2001-2016)的样本,作者调查了行业对审计师客户子集的冲击是否会分散审计师的注意力,并影响其他客户审计中应用的专业怀疑。研究结果作者发现,分心审计师的客户更有可能达到或超过分析师的一致预测,这表明审计师的职业怀疑受到分心事件的影响。横断面分析表明,当分心的审计师审计不太重要的客户、面临较低的第三方法律责任和经历较高的增长时,分心事件对审计质量的负面影响更为明显。使用审计质量的另一种衡量标准,额外的分析表明,分心审计师的客户在随后几年重新公布其收益的概率更高。总的来说,经验证据表明,当审计师分心时,审计质量会降低。原创性/价值该研究补充了Cassell等人最近的工作。(2019),该研究表明,2008-2009年金融危机影响了银行专业审计师对非银行客户的审计质量。虽然Cassell等人(2019)关注的是一个行业(即金融服务业)的一次冲击(金融危机),但该研究考察了广泛行业中更频繁的冲击,以确定分心事件的潜在影响,提高了调查结果在非衰退期对所有行业和所有审计师(专业和非专业)的可推广性。
本文章由计算机程序翻译,如有差异,请以英文原文为准。
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来源期刊
CiteScore
4.30
自引率
0.00%
发文量
18
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