The Effect of Joint Auditor Pair Composition on Audit Quality: Evidence from Impairment Tests

• 成果类型: Article
• 署名作者: Lobo, Gerald J.; Paugam, Luc; Zhang, Dana; Casta, Jean Francois
• 署名单位: University of Houston System; University of Houston; ESSEC Business School; Universite PSL; Universite Paris-Dauphine
• 刊物名称: CONTEMPORARY ACCOUNTING RESEARCH
• ISSN/ISSBN: 0823-9150
• DOI: 10.1111/1911-3846.12244
• 发表日期: 2017
• 页码: 118-153
• 关键词: fair value; earnings; COMPETITION; DISCRETION; conservatism; COOPERATION; management; too

摘要

Using a sample of firms from France, where the law requires the use of two auditors, we study the effect of auditor pair composition on audit quality by examining a specific account, goodwill impairment. We document that firms audited by a Big 4-non-Big 4 auditor pair (BS) are more likely to book an impairment and book a larger impairment than firms audited by a Big 4-Big 4 auditor pair (BB) when low-performance indicators suggest a greater likelihood of impairment. Moreover, firms audited by a BB pair reduce impairment disclosures when they book impairments, while firms audited by a BS pair do not, suggesting lower transparency for firms audited by a BB pair. Our results inform investors and firms in mandatory joint audit regimes, as well as regulators who are considering requiring joint audits.