EVALUATING THE EFFECT OF INDUSTRY SPECIALIST DURATION ON AUDIT QUALITY AND AUDIT FEES

Jose Vega and Dennis López
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Jose Vega: University of Texas at San Antonio
Dennis López: University of Texas at San Antonio

No 23, Working Papers from College of Business, University of Texas at San Antonio

Abstract: Using a sample of 11,322 observations during the period 2006 to 2010, we evaluate whether industry specialist duration (i.e., the amount of time an auditor has been considered an industry specialist) affects audit quality and audit fees. We find that auditors with longer specialist durations provide higher audit quality, compared to auditors with shorter durations. We also find that when auditors are neither long nor short duration specialists and receive positive abnormal audit fees, they trend to decrease audit quality. Lastly, we find that audit quality does not decrease when long and short duration specialists receive positive abnormal fees. Thus, our findings do not support the argument for mandatory auditor rotation.

Keywords: audit fees; audit quality; auditor tenure; going concern; industry specialization (search for similar items in EconPapers)
JEL-codes: M41 M42 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2012-05-08
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