| Summary: | 碩士 === 東吳大學 === 會計學系 === 98 === In recent years, the accounting scandals such as Enron in USA and Procomp Informatics in Taiwan have focus the public’s eye on audit quality and on independence. The regulators and the academy pay a lot of attention to the question: is the length of auditor tenure and audit quality relevant or not? Most of the prior studies find no evidence supporting the argument that audit quality decreases with auditor tenure. The definition of the length of tenure is over 5 or 8 years as a dividing line in those studies. In fact, the auditor tenure can be up to 22 years. The past research can be true to reflect "long tenure" or "short tenure" or not, and whether the way of dichotomization can really inference the relationship between auditor tenure and audit quality? This study investigates the relations between auditor tenure and audit quality, and based on long and short auditor tenure, two issues are discussed separately: (1) when auditor tenure more than seven years, the relationship between auditor tenure and audit quality; (2) in the early years, the audit quality because of auditor retires and then change is better than non-retires.
We use discretionary accruals as proxies for audit quality to examine the relation between auditor tenure and audit quality. This study collects 3,240 observations of Taiwanese listed and OTC companies from 1993 to 2002 on issue 1, and 2,788 observations from 1999 to 2008 on issue 2. The empirical results show that, in the long tenure, the auditor tenure and discretionary accruals was a significant negative relationship, meaning audit quality does not deteriorate over time as the auditor-client relationship lengthens. In the short tenure, the audit quality because of auditor retires then change is better than non-retires.
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