دانلود رایگان مقاله انگلیسی به کارگیری شرکای مشارکتی در تنظیم استاندارد حسابرسی و کیفیت حسابرسی - تیلور و فرانسیس 2017

ABSTRACT

In this study, we investigate whether engagement partners who participate in the national auditing standard setting can provide better audit quality, and explore the underlying cause in the context of Taiwan, where the name of engagement partners can be identified in audit reports. The empirical results indicate that firms audited by incumbent Auditing Standards Committee (ASC) member auditors are associated with lower discretionary accruals and a lower probability of having small profits. The results support the view that concerns about the impairments of increased reputational capital may be the most likely cause that explains the ASC member auditors’ better audit quality. This study also provides the benefits that can arise from the identification of engagement partners.

7. Conclusions

This study investigates whether engagement partners who participate in national auditing standard setting can better constrain earnings management, and also explores the possible cause that explains the results. This is a new partner-level characteristic to highlight differential audit quality compared with those identified in prior studies. The findings show that firms audited by incumbent ASC member auditors are associated with lower discretionary accruals and a lower probability of reporting small profits. Therefore, concerns about the impairments of increased reputational capital may be the most likely cause for our findings. Our evidence indicates that a positive event which increases an auditor’s reputational capital can therefore provide enhanced audit quality, echoing the call from DeFond and Zhang (2014). In addition, given that accounting and auditing studies have begun to investigate the characteristics of the standard setter (regulator) and their effects on equilibrium outcomes, this study may provide additional insights.

The results from this study have at least two implications and also provide opportunities for future research. First, the better audit quality associated with the incumbent ASC member auditors indicates that our proxy to identify high quality auditors may also be used to investigate other settings, such as the PCAOB of the USA and the Audit & Assurance Council of the U.K., where all members are fulltime, let alone in countries where the members of their auditing standard setter are part-time, such as China and the ASB of the USA Second, although we infer that better audit quality may be driven primarily by ASC member auditors’ reputation concerns in Taiwan’s setting, we do not intend to generalize our results to other jurisdictions, especially countries with higher auditor litigation risks. For regulators, researchers who are concerned about the external validity of our results, further studies can be conducted in the future.