Do Joint Audits Improve or Impair Audit Quality?

• 成果类型: Article
• 署名作者: Deng, Mingcherng; Lu, Tong; Simunic, Dan A.; Ye, Minlei
• 署名单位: University of Houston System; University of Houston; University of British Columbia; University of Toronto
• 刊物名称: JOURNAL OF ACCOUNTING RESEARCH
• ISSN/ISSBN: 0021-8456
• DOI: 10.1111/1475-679X.12060
• 发表日期: 2014
• 页码: 1029-1060
• 关键词: legal liability; STANDARDS; conservatism; reliability

摘要

Conventional wisdom holds that joint audits would improve audit quality by enhancing audit evidence precision because Two heads are better than one. Our paper challenges this wisdom. We show that joint audits by one big firm and one small firm may impair audit quality, because, in that situation, joint audits induce a free-riding problem between audit firms and reduce audit evidence precision. We further derive a set of empirically testable predictions comparing audit evidence precision and audit fees under joint and single audits. This paper, the first theoretical study of joint audits, contributes to a better understanding of the economic consequences of joint audits on audit quality.