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Evaluating The Effect Of Industry Specialist Duration On Audit Quality And Audit Fees

Author

Listed:
  • TINA M. Jose Vega

    (University of Texas at San Antonio)

  • Dennis M. López

    (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.

Suggested Citation

  • TINA M. Jose Vega & Dennis M. López, 2012. "Evaluating The Effect Of Industry Specialist Duration On Audit Quality And Audit Fees," Working Papers 0023, College of Business, University of Texas at San Antonio.
  • Handle: RePEc:tsa:wpaper:0023
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    File URL: http://interim.business.utsa.edu/wps/acc/0023ACC-502-2012.pdf
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    References listed on IDEAS

    as
    1. Herriott, Scott R & Levinthal, Daniel & March, James G, 1985. "Learning from Experience in Organizations," American Economic Review, American Economic Association, vol. 75(2), pages 298-302, May.
    2. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-291, March.
    3. Robert E. Quinn & John Rohrbaugh, 1983. "A Spatial Model of Effectiveness Criteria: Towards a Competing Values Approach to Organizational Analysis," Management Science, INFORMS, vol. 29(3), pages 363-377, March.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    audit fees; audit quality; auditor tenure; going concern; industry specialization;

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing

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