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Signing auditors’ experience gap and audit quality

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  • Li, Minghui
  • Yang, Xin
  • Zhai, Kerui

Abstract

This study investigates how interactions between signing auditors with different levels of experience affect audit outcomes. Using the unique data from China, we find that a higher experience gap between signing auditors is associated with higher audit quality, as indicated by lower absolute discretionary accruals and a smaller likelihood of restatements. Further analyses suggest that the positive association between signing auditors' experience gap and audit quality is more pronounced for client firms that are more complex, have weaker corporate governance and higher information asymmetry, are audited by smaller audit firms, and are more economically important to auditors. Our results are robust to alternative research designs, alternative measures of auditor experience and audit quality, and other sensitivity tests. We contribute to the literature on auditor experience and audit team diversity with implications for audit firms’ personnel assignment.

Suggested Citation

  • Li, Minghui & Yang, Xin & Zhai, Kerui, 2024. "Signing auditors’ experience gap and audit quality," International Review of Economics & Finance, Elsevier, vol. 95(C).
    • Handle: RePEc:eee:reveco:v:95:y:2024:i:c:s1059056024004763
    DOI: 10.1016/j.iref.2024.103484
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