Impact of auditor rotation on audit quality in the Indian context

Kuntluru Sudershan () and A Athira ()
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Kuntluru Sudershan: Indian Institute of Management Kozhikode
A Athira: Indian Institute of Management Kozhikode

No 341, Working papers from Indian Institute of Management Kozhikode

Abstract: The aim of audit is to provide a reliable independent examination of the financial statements which will be useful to users of financial statements in taking effective decisions. This study examines the impact of auditor rotation on audit quality of NSE listed companies in India. Our results show that the audit partner rotation contributes negatively to audit quality and audit firm rotation is not an important determinant of audit quality. The present study is based on a sample of 1644 NSE listed companies during the period of 2011-2018. It constitutes a large panel sample of 11205 firm-year observations on NSE listed companies in India. Our study contributes to the literature on auditor rotation and audit quality by providing evidence at both audit partner as well as audit firm level. The findings state that audit partner rotation adversely affects audit quality.

Keywords: Audit partner rotation; Audit firm rotation; Audit quality; Discretionary accrual (search for similar items in EconPapers)
Pages: 3 pages
Date: 2019-06
New Economics Papers: this item is included in nep-acc
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