TY  - UNPD
A1  - Gipper, Brandon
A1  - Hail, Luzi
A1  - Leuz, Christian
T1  - On the economics of audit partner tenure and rotation : evidence from PCAOB data
T2  - Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 608
N2  - We provide the first partner tenure and rotation analysis for a large cross-section of U.S. publicly listed firms over an extended period. We analyze the effects on audit quality as well as economic tradeoffs with respect to audit hours and fees. On average, we find no evidence for audit quality declines over the tenure cycle and, consistent with the former, little support for fresh-look benefits after five-year mandatory rotations. Nevertheless, partner rotations have significant economic consequences. We find increases in audit fees and decreases in audit hours over the tenure cycle, which differ by partner experience, client size, and competitiveness of the local audit market. Our findings are consistent with efforts by the audit firms to minimize disruptions and audit failures around mandatory rotations. We also analyze special circumstances, such as audit firm or audit team switches and early partner rotations. We show that these situations are more disruptive and more likely to exhibit audit quality effects. In particular, we find that low quality audits give rise to early engagement partner rotations and in this sense have (career) consequences for partners.
T3  - CFS working paper series - 608 
KW  - Auditing
KW  - Audit fees
KW  - Audit quality
KW  - Auditor rotation
KW  - Audit partner tenure
KW  - Competition
KW  - PCAOB
Y1  - 2018
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/47971
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-479713
UR  - https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3289927
IS  - June 2018
PB  - Center for Financial Studies
CY  - Frankfurt, M.
ER  -