The Effect of Audit Partner Rotation on Audit Fees and Audit Report Timeliness

• Main Authors: Shang-De Chou, 周尚德
• Other Authors: 陳耀宗
• Format: Others
• Language: zh-TW
• Published: 2018
• Online Access: http://ndltd.ncl.edu.tw/handle/89stdq

碩士 === 國立臺灣大學 === 會計學研究所 === 106 === Audit partners in Taiwan under ROCGAAS No. 46 are required to rotate every seven years with a two-year cooling-off period. While lots of papers have already discussed the rotation effect on audit quality, this study differs from prior studies by empirically examining the rotation effect on audit cost in two aspects: audit fees and audit report timeliness. By using Taiwanese listed firms spanning from year 2009 to year 2016, this study finds that the audit partner rotation effect only exists in audit report timeliness, but not in audit fees. There are two possible reasons for this result. Firstly, the clients do not compensate for additional costs occurred from auditor rotation. Secondly, the audit firms tend to absorb additional audit cost to avoid losing clients. Under the circumstances of insufficient audit resources, additional audit work cause the audit report timeliness decreasing, as measured by longer audit report lag. The results remain robust in my sample of the Big 4 firms and the larger firms, respectively. The empirical findings provide implications for legislators, auditors and scholars that audit partner rotation not only affects audit quality or earnings quality but also influences audit work.