Employee Movements from Audit Firms to Audit Clients

• 成果类型: Article
• 署名作者: Finley, Andrew R.; Kim, Mindy H. J.; Lamoreaux, Phillip T.; Lennox, Clive S.
• 署名单位: Claremont Colleges; Claremont Graduate University; Claremont McKenna College; George Mason University; Arizona State University; Arizona State University-Tempe; University of Southern California
• 刊物名称: CONTEMPORARY ACCOUNTING RESEARCH
• ISSN/ISSBN: 0823-9150
• DOI: 10.1111/1911-3846.12494
• 发表日期: 2019
• 页码: 1999-2034
• 关键词: officers; QUALITY

摘要

Regulators have expressed concerns about the revolving door between auditors and clients, whereby audit employees move directly from audit firms to audit clients (i.e., direct alumni hires). Regulators are concerned that these direct hires could compromise audit quality, partly because these employees could have previously audited their hiring company's financial statements. In contrast, we examine accounting and finance executives who move indirectly from audit firms to audit clients and who could not have previously audited the hiring company's financial statements (i.e., indirect alumni hires). We show that indirect hires occur more often than the direct hires that have concerned regulators. We predict and find that both direct and indirect alumni hires are associated with lower rates of executive turnover and audit firm turnover. However, there is no evidence that the reduced rates of executive turnover are explained by managerial entrenchment or that these hires are associated with lower audit quality. Overall, our findings suggest that direct and indirect employee movements from audit firms to audit clients are beneficial to executives, audit clients, and audit firms because they reduce the incidence of costly turnover.