دانلود رایگان مقاله انگلیسی بررسی های نظارتی شرکای حسابرسی و بهبود کیفیت حسابرسی - تیلور و فرانسیس 2017

ABSTRACT

Prior studies of the effect of regulatory monitoring on audit quality focus on regulatory sanctions but ignore regulatory investigations. We hand-collected data on the China Securities Regulatory Commission (CSRC) investigations announced during 2001–2015 to examine the impact of CSRC investigations on the audit quality of the targeted partners. We find that after the audit partners are investigated by the CSRC, their clients exhibit a lower absolute value of discretionary accruals and the partners are more likely to issue modified audit opinions. Our results suggest that CSRC investigations lead to improvement in the audit quality of the partners involved in the investigations. In contrast, CSRC sanctions have a relatively weak effect on the audit quality of the involved partners. Overall, our study provides evidence that CSRC monitoring helps to improve the audit quality of audit partners, and the effect manifests around CSRC investigations.

5. Conclusion

Prior studies of the regulatory monitoring of auditors often focus on the effects of regulatory sanctions on the involved audit firms. We advance the literature by examining how regulatory investigations of audit partners affect their audit quality. Specifically, we hand-collect a sample of CSRC investigations of audit partners and explore changes in the involved partners’ audit quality around the investigations. We find that the involved audit partners are more likely to issue modified audit opinions and that their clients report lower levels of absolute value of discretionary accruals after CSRC investigations, which suggests that audit partners improve their audit quality after being investigated. Our findings are robust when we conduct a difference-in-differences test using non-involved audit partners in the same audit firm as the control group. Interestingly, we find no evidence that involved audit partners improve their audit quality after CSRC sanctions. Collectively, our results indicate that CSRC monitoring has a positive effect on the audit quality of the targeted audit partners, and this effect manifests around CSRC investigations rather than CSRC sanctions.