Disciplining Role of Auditor Tenure and Mandatory Auditor Rotation

• 成果类型: Article
• 署名作者: Dordzhieva, Aysa
• 署名单位: University of Texas System; University of Texas Austin
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/TAR-2018-0277
• 发表日期: 2022
• 页码: 161-182
• 关键词: market perception evidence; partner rotation; QUALITY

摘要

This study addresses the international debate over whether the rotation of audit firms should be mandatory. Mandatory rotation rules have been adopted by the European Union, but these rules have not been established in the United States. Proponents of the policy believe that a long-tenure auditor-client relationship leads to the auditor building an excessive economic bond with the client, which may then erode auditor independence. Motivated by this claim, I build a theoretical model that compares auditor incentives to issue independent reports under regimes with and without mandatory rotation. The model demonstrates conditions under which mandatory rotation could actually impair auditor independence, contrary to the popular view.