City University of Hong Kong

CityU Institutional Repository >
3_CityU Electronic Theses and Dissertations >
ETD - Dept. of Accountancy >
AC - Master of Philosophy  >

Please use this identifier to cite or link to this item:

Title: Auditor rotation versus audit partner rotation : an examination of audit quality, audit pricing and audit report lag in Australia
Other Titles: Shen ji shi zhuan huan dui bi shen ji he huo ren zhuan huan : dui shen ji zhi liang, shen ji ding jia ji shen ji bao gao shi zhi de Ao Zhou shi chang jian cha
審計師轉換對比審計合夥人轉換 : 對審計質量, 審計定價及審計報告時滯的澳洲市場檢察
Authors: Cheuk, Man Chiu (卓文超)
Department: Dept. of Accountancy
Degree: Master of Philosophy
Issue Date: 2006
Publisher: City University of Hong Kong
Subjects: Auditing -- Australia -- Costs
Auditing -- Australia -- Quality control
Auditors' reports -- Australia
Notes: CityU Call Number: HF5616.A8 C45 2006
Includes bibliographical references (leaves 65-73)
Thesis (M.Phil.)--City University of Hong Kong, 2006
ii, 99 leaves ; 30 cm.
Type: Thesis
Abstract: This study investigates the effect of audit partner and audit firm rotation on audit quality, audit pricing and audit report timeliness which are measured by the absolute value of discretionary accruals, audit fees and number of days between year ends and audit report dates respectively in a voluntary regime. Using data from Australian audit market where each audit report discloses the name of the only audit engagement partner, I first replicate and modify tests in prior studies and find that the generally observed positive association between audit firm tenure and audit quality disappears when there is audit partner rotation. Then, I introduce two dummies for audit partner and firm rotation in the regressions. My results show the following. (1) There are no significant differences in audit quality between engagements with audit partner rotation and those with audit firm rotation. (2) Audit quality of engagements with audit partner rotation is also not significantly different from that without any rotation. (3) Audit fees of engagements with audit partner rotation are significantly different from those with audit firm rotation only if the confounding effect of low-balling practice is not controlled for. (4) Audit engagements with audit partner rotation are charged significantly higher audit fees than ongoing engagements. On the other hand, the results of audit timeliness show that, contrary to the start-up time hypothesis, audit partner rotation and lateral audit firm rotation do not affect audit report lags (ARL) significantly. Nor does cross-down audit firm rotation have any significant effect. Nevertheless, a positive and significant association between cross-up audit firm rotation and ARL is observed. Thus, the realignment hypothesis seems to play a more influential role in ARL determination comparing with the start-up time and auditor-timeliness difference hypotheses. Taken collectively, the empirical tests provide evidence that does not support audit partner and audit firm rotation policies that are being espoused by regulators around the world to boost up audit quality.
Online Catalog Link:
Appears in Collections:AC - Master of Philosophy

Files in This Item:

File Description SizeFormat
fulltext.html159 BHTMLView/Open
abstract.html159 BHTMLView/Open

Items in CityU IR are protected by copyright, with all rights reserved, unless otherwise indicated.


Valid XHTML 1.0!
DSpace Software © 2013 CityU Library - Send feedback to Library Systems
Privacy Policy · Copyright · Disclaimer