The opportunity for partner industry knowledge sharing within audit offices and audit quality

Paul N. Michas, Dan Russomanno and Meiling Zhao ()
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Paul N. Michas: The University of Arizona
Dan Russomanno: The University of Arizona
Meiling Zhao: The Chinese University of Hong Kong

Review of Accounting Studies, 2025, vol. 30, issue 3, No 9, 2555-2606

Abstract: Abstract We conjecture that a greater opportunity for audit partners to share personal industry knowledge with each other within audit offices is associated with higher audit quality. Using Public Company Accounting Oversight Board (PCAOB) Form AP data, we analyze each partner’s client portfolio and construct sharing measures. First, we find extant measures of an audit office’s industry market share, industry portfolio share, and industry diversity are quite noisy in inferring our sharing measures. Next, we perform multivariate analyses and find negative associations between the opportunity to share industry knowledge and both restatements and absolute abnormal accruals. Further, we find this association varies cross-sectionally with other important auditor and client characteristics. Taken together, our evidence is consistent with a positive association between the opportunity for partners to share their industry knowledge with each other and audit quality.

Keywords: Audit offices; Audit partners; Audit quality; Industry knowledge and specialization; Knowledge sharing; PCAOB form AP; D8; M41; M42 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s11142-025-09872-w

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