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The Role of Tacit Knowledge in Auditor Expertise and Human Capital Development

Author

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  • JASMIJN C. BOL
  • CASSANDRA ESTEP
  • FRANK MOERS
  • MARK E. PEECHER

Abstract

Two critical aspects of the model of auditor expertise development in Tan and Libby [1997] are that audit firms do not value tacit knowledge in inexperienced auditors but do value it in experienced auditors. We update the former and extend the latter. Our paper predicts and finds that audit firms now do value tacit knowledge in inexperienced auditors, especially when their supervisors have higher tacit knowledge. Our proxies of value include higher promotability assessments, annual evaluations, and cash bonuses. Our paper also extends Tan and Libby [1997] by positing that enhanced development of expertise and audit firm human capital are two reasons audit firms value tacit knowledge in experienced auditors. As predicted, higher tacit knowledge in experienced auditors is positively associated with higher tacit knowledge acquisition by their inexperienced subordinates and with stronger firm commitment of inexperienced subordinates having higher tacit knowledge.

Suggested Citation

  • Jasmijn C. Bol & Cassandra Estep & Frank Moers & Mark E. Peecher, 2018. "The Role of Tacit Knowledge in Auditor Expertise and Human Capital Development," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 56(4), pages 1205-1252, September.
    • Handle: RePEc:bla:joares:v:56:y:2018:i:4:p:1205-1252
    DOI: 10.1111/1475-679X.12220
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    References listed on IDEAS

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    Cited by:

    1. Dan Dacian Cuzdriorean, 2018. "Auditing Research: A Review Of Recent Research Advances," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 6(4), pages 14-26.
    2. Nils Wuytens & Jelle Schepers & Pieter Vandekerkhof & Wim Voordeckers, 2025. "The allegory of tacit knowledge: a review & research agenda for entrepreneurship," Review of Managerial Science, Springer, vol. 19(5), pages 1347-1380, May.
    3. Grohnert, Therese & Gijselaers, Wim H. & Meuwissen, Roger H.G. & Trotman, Ken T., 2025. "The effects of a supportive learning culture and rank on professional skepticism in information search," Accounting, Organizations and Society, Elsevier, vol. 114(C).
    4. Downar, Benedikt & Ernstberger, Jürgen & Koch, Christopher, 2021. "Who makes partner in Big 4 audit firms? – Evidence from Germany," Accounting, Organizations and Society, Elsevier, vol. 91(C).
    5. Stéphanie Thiéry & Stéphane Lhuillery & Marion Tellechea, 2023. "How can governance, human capital, and communication practices enhance internal audit quality?," Post-Print hal-04296250, HAL.
    6. Aobdia, Daniel & Liu, Xuejiao & Na, Ke & Wu, Hong, 2025. "Client restatement announcement, audit office human capital investment, and audit quality improvements," Journal of Accounting and Economics, Elsevier, vol. 79(2).
    7. Dierynck, Bart & Kadous, Kathryn & Peters, Christian P.H., 2024. "Learning in the auditing profession: A framework and future directions," Accounting, Organizations and Society, Elsevier, vol. 113(C).
    8. Christoph Feichter & Isabella Grabner, 2020. "Empirische Forschung zu Management Control – Ein Überblick und neue Trends [Empirical Management Control Reserach—An Overview and Future Directions]," Schmalenbach Journal of Business Research, Springer, vol. 72(2), pages 149-181, June.
    9. Charles Ham & Rebecca N. Hann & MaryJane Rabier & Wenfeng Wang, 2025. "Auditor Skill Demands and Audit Quality: Evidence from Job Postings," Management Science, INFORMS, vol. 71(7), pages 5805-5829, July.
    10. Cardinaels, Eddy & Dierynck, Bart & Yin, H. & Beckers, N., 2025. "Task-specific experience, tacit knowledge, and compensation contracts," Other publications TiSEM 94d8a26b-e37a-42f3-a99f-7, Tilburg University, School of Economics and Management.
    11. Wuchun Chi & Anxuan Xie & Hong Xie & Chun-Chan Yu, 2025. "Does audit partners’ co-signing experience improve audit quality?," Review of Quantitative Finance and Accounting, Springer, vol. 65(3), pages 1261-1295, October.
    12. Thiéry, Stéphanie & Lhuillery, Stephane & Tellechea, Marion, 2023. "How can governance, human capital, and communication practices enhance internal audit quality?," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 52(C).
    13. Grabner, Isabella & Künneke, Judith & Moers, Frank, 2025. "Promotion decisions and the adoption of explicit potential assessment," Other publications TiSEM cd81d3bd-ce65-4a47-b552-6, Tilburg University, School of Economics and Management.
    14. Dierynck, Bart & Kadous, Kathryn & Peters, Christian P. H., 2024. "Learning in the auditing profession: A framework and future directions," Other publications TiSEM eb74c8e4-bc4a-4b71-b88a-4, Tilburg University, School of Economics and Management.
    15. Isabella Grabner & Judith Künneke & Frank Moers, 2025. "Promotion Decisions and the Adoption of Explicit Potential Assessment," Management Science, INFORMS, vol. 71(11), pages 9233-9255, November.
    16. Causholli, Monika & Floyd, Theresa & Jenkins, Nicole Thorne & Soltis, Scott M., 2021. "The ties that bind: Knowledge-seeking networks and auditor job performance," Accounting, Organizations and Society, Elsevier, vol. 92(C).

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