Do Firms That Have a Common Signing Auditor Exhibit Higher Earnings Comparability?

• 成果类型: Article
• 署名作者: Chen, Jeff Zeyun; Chen, Mei-Hui; Chin, Chen-Lung; Lobo, Gerald J.
• 署名单位: Texas Christian University; National Defense University - USA; National Chengchi University; University of Houston System; University of Houston
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-52522
• 发表日期: 2020
• 页码: 115-143
• 关键词: Financial statement comparability; industry expertise; partner tenure; QUALITY; experience; task

摘要

We hypothesize that if individual auditors possess unique audit styles that they consistently apply to different audit engagements, then client firms with a common signing auditor will exhibit higher earnings comparability. Using a large sample of Chinese firms, we find that client firms report more comparable earnings when they are audited by the same individual auditor than when they are audited by (1) different audit firms, (2) the same audit firm, but different audit offices, and (3) the same audit office, but different individual auditors. The individual auditor style effect is stronger for larger audit firms, senior signing auditors, and signing auditors with more stable teamwork experience. We also document that having a common signing auditor is associated with lower analyst earnings forecast error and dispersion for client firms. This study contributes to the literature by showing that individual auditors have a significant impact on client firms' earnings comparability.