The association between auditor quality and human capital
AbstractPurpose – Following the high profile collapses of Enron and WorldCom, and the demise of Andersen, human capital (HC) has become a key driver of auditor quality. The purpose of this study is to investigate if there is a positive association between HC and auditor quality in public accounting firms and if the extent of association varies between accounting firms. Design/methodology/approach – Multiple regression and logistic modeling are applied to examine the association between auditor quality and HC. The sample consists of 4,865 firm-year observations over the period from 1989 to 2004. Findings – The main findings indicate that higher investments in HC correspond to a higher level of auditor quality. Furthermore, the power of HC on auditor quality has a significant difference between public and non-public audit market firms. Research limitations/implications – A number of theoretical and measurement limitations are acknowledged that could further increase the statistical power of the tests. Practical implications – The findings should be of interest to regulators, auditors, audit clients, and academics. The findings also suggest that HC has an impact on overall auditor quality. The audit firms need more well-educated and well-trained professionals with the experience to keep pace with the changing nature of the market and to perform audit tasks. Originality/value – The findings fill a gap in the literature regarding auditor quality and HC from the perspective of public accounting firms.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Emerald Group Publishing in its journal Managerial Auditing Journal.
Volume (Year): 24 (2009)
Issue (Month): 6 (July)
Contact details of provider:
Web page: http://www.emeraldinsight.com
Postal: Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Stiglitz, Joseph E, 1975.
"The Theory of "Screening," Education, and the Distribution of Income,"
American Economic Review,
American Economic Association, vol. 65(3), pages 283-300, June.
- Joseph E. Stiglitz, 1973. "The Theory of 'Screening', Education, and the Distribution of Income," Cowles Foundation Discussion Papers 354, Cowles Foundation for Research in Economics, Yale University.
- DeAngelo, Linda Elizabeth, 1981. "Auditor size and audit quality," Journal of Accounting and Economics, Elsevier, vol. 3(3), pages 183-199, December.
- Hirshleifer, Jack, 1973. "Where Are We in the Theory of Information?," American Economic Review, American Economic Association, vol. 63(2), pages 31-39, May.
- Seleshi Sisaye, 2011. "The functional-institutional and consequential-conflictual sociological approaches to accounting ethics education: Integrations from sustainability and ecological resources management literature," Managerial Auditing Journal, Emerald Group Publishing, vol. 26(3), pages 263-294, March.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Harris).
If references are entirely missing, you can add them using this form.