IDEAS home Printed from
   My bibliography  Save this article

Impact of renewable long-term audit mandates on audit quality


  • Ann Vanstraelen


Anglo-American countries like the US and the UK allow companies to switch auditors every year. In contrast, some continental European countries restrict auditor switching by allowing only renewable long-term audit mandates. This paper aims to analyse the impact of renewable long-term audit mandates on audit quality. Audit quality is considered from the viewpoint of the external users of the financial statements. It is questioned whether renewable long-term audit mandates have an impact on the auditor's reporting behaviour and on auditor independence. This research is motivated by the lack of consensus in the literature on the impact of the length of the auditor client relationship on audit quality. Moreover, few empirical studies use publicly available secondary data in order to determine whether perceived threats to auditor independence actually compromise auditor independence. Therefore, our research methodology consists in the development of a logistic regression model in which the explanatory variables are measured using publicly available data. The results of the study suggest that long-term auditor client relationships significantly increase the likelihood of an unqualified opinion or significantly reduce the auditor's willingness to qualify audit reports. A significant difference was also found between the auditor's reporting behaviour in the first two years versus the last year of the audit mandate. Auditors are more willing to issue an unqualified audit report in the first two years of their official mandate than in the last year of their mandate. This could be an indication that the decision to renew the auditor's mandate is already taken and known to the auditor before he has issued his last audit report within his current mandate. The policy implications of these findings could be in favour of mandatory auditor rotation to maintain the value of an audit for the external users. However, given recent theoretic evidence on the adverse effects of mandatory auditor rotation, there is a need to develop alternative measures to safeguard auditors' independence.

Suggested Citation

  • Ann Vanstraelen, 2000. "Impact of renewable long-term audit mandates on audit quality," European Accounting Review, Taylor & Francis Journals, vol. 9(3), pages 419-442.
  • Handle: RePEc:taf:euract:v:9:y:2000:i:3:p:419-442
    DOI: 10.1080/09638180020017140

    Download full text from publisher

    File URL:
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    1. repec:bla:joares:v:28:y:1990:i:1:p:77-120 is not listed on IDEAS
    2. Craswell, Allen T. & Francis, Jere R. & Taylor, Stephen L., 1995. "Auditor brand name reputations and industry specializations," Journal of Accounting and Economics, Elsevier, vol. 20(3), pages 297-322, December.
    3. repec:bla:joares:v:22:y:1984:i:1:p:1-20 is not listed on IDEAS
    4. repec:bla:joares:v:32:y:1994:i:2:p:241-261 is not listed on IDEAS
    5. repec:bla:joares:v:21:y:1983:i:2:p:534-544 is not listed on IDEAS
    6. Acemoglu, Daron, 1994. "A Dynamic Model of Collusion," CEPR Discussion Papers 1027, C.E.P.R. Discussion Papers.
    7. Arrunada, Benito & Paz-Ares, Candido, 1997. "Mandatory rotation of company auditors: A critical examination," International Review of Law and Economics, Elsevier, vol. 17(1), pages 31-61, March.
    8. Dye, Ronald A, 1993. "Discussion: Limiting Auditors' Liability," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 2(3), pages 435-443, Fall.
    9. repec:bla:joares:v:32:y:1994:i::p:1-30 is not listed on IDEAS
    10. repec:bla:joares:v:32:y:1994:i::p:39-59 is not listed on IDEAS
    11. Gietzmann, M. B. & Quick, R., 1998. "Capping auditor liability: The German experience," Accounting, Organizations and Society, Elsevier, vol. 23(1), pages 81-103, January.
    12. Daron Acemoglu & Miles Gietzmann, 1998. "Auditor independence, incomplete contracts and the role of legal liability," European Accounting Review, Taylor & Francis Journals, vol. 6(3), pages 355-375.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Beatriz García Osma & Belén Gill de Albornoz Noguer & Elena De las Heras Cristobal, 2016. "Opinion shopping: Partner versus firm-level evidence," Working Papers. Serie EC 2016-02, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    2. repec:hur:ijarbs:v:7:y:2017:i:6:p:487-505 is not listed on IDEAS
    3. repec:eee:spacre:v:15:y:2012:i:2:p:287-310 is not listed on IDEAS
    4. repec:eco:journ1:2018-01-19 is not listed on IDEAS
    5. repec:eee:spacre:v:16:y:2013:i:2:p:118-125 is not listed on IDEAS
    6. repec:eee:spacre:v:18:y:2015:i:2:p:115-126 is not listed on IDEAS
    7. repec:hur:ijaraf:v:7:y:2017:i:2:p:117-130 is not listed on IDEAS
    8. Kym Butcher & Graeme Harrison & Jill McKinnon & Philip Ross, 2011. "Auditor appointment in compulsory audit tendering," Accounting Research Journal, Emerald Group Publishing, vol. 24(2), pages 104-149, September.
    9. Seyed Mahmoud Hosseinniakani & Helena Inacio & Rui Mota, 2014. "A Review on Audit Quality Factors," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 4(2), pages 243-254, April.

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:euract:v:9:y:2000:i:3:p:419-442. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Longhurst). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.