TY - UNPD A1 - Gipper, Brandon A1 - Hail, Luzi A1 - Leuz, Christian T1 - Determinants and career consequences of early audit partner rotations T2 - Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 676 N2 - We examine how often and why some audit partners rotate off client engagements before the end of the maximum five-year cycle period. Specifically, we investigate whether audit quality issues play a role for engagement partners and clients to separate prematurely. For a sample of about 4,000 within-audit firm partner rotations for Big 6 clients over the 2008 to 2014 period, we find that client characteristics such as financial leverage or performance have little explanatory power. In contrast, severe audit quality issues such as financial restatements or PCAOB inspection findings are associated with early partner rotations. These associations are more pronounced for early rotations that are not explained by scheduled retirements, promotions, or temporary leaves as well as for large clients and when partners are less experienced. We also find that female partners have a higher likelihood of early rotation for audit quality reasons. Early rotations have career consequences. Partners are assigned to fewer SEC issuer clients, manage fewer audit hours, receive lower partner ratings, and are more likely to be internally inspected after being rotated early. Our results suggest that audit quality concerns are an important factor for early partner rotations with ensuing negative career consequences for partners’ client assignments and management responsibilities. T3 - CFS working paper series - 676 KW - auditor rotation KW - audit quality KW - audit partners KW - career development KW - audit industry KW - PCAOB Y1 - 2021 UR - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/63406 UR - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-634064 UR - https://ssrn.com/abstract=3990129 IS - October 2021 PB - Center for Financial Studies CY - Frankfurt, M. ER -