Capital Market Consequences of Audit Partner Quality

• 成果类型: Article
• 署名作者: Aobdia, Daniel; Lin, Chan-Jane; Petacchi, Reining
• 署名单位: Northwestern University; National Taiwan University; Massachusetts Institute of Technology (MIT)
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-51054
• 发表日期: 2015
• 页码: 2143-2176
• 关键词: industry specialization; earnings management; disclosure; accruals; office; TENURE; firm; determinants; reputation; expertise

摘要

This paper examines whether the identity of the individual audit partners provides informational value to capital market participants beyond the value provided by the identity of the audit firms. Using data from Taiwan, where firms are mandated to disclose the names of the engagement partners, we find a positive association between the partner's quality and the client firm's earnings response coefficient. We also find a positive market reaction when a firm replaces a lower quality partner with a higher quality one. Moreover, we find evidence that firms audited by higher quality partners experience smaller initial public offering (IPO) underpricing and are able to obtain better debt contract terms. Overall, these results suggest that the quality of engagement partners matters to capital market participants.