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Jiang, L.; Rundo, J.; Shi, L.; Zhou, N. Audit Partner Characteristics and Their Impacts on Audit Quality: Evidence from Around the World. Encyclopedia. Available online: (accessed on 13 July 2024).
Jiang L, Rundo J, Shi L, Zhou N. Audit Partner Characteristics and Their Impacts on Audit Quality: Evidence from Around the World. Encyclopedia. Available at: Accessed July 13, 2024.
Jiang, Linting, Janean Rundo, Linna Shi, Nan Zhou. "Audit Partner Characteristics and Their Impacts on Audit Quality: Evidence from Around the World" Encyclopedia, (accessed July 13, 2024).
Jiang, L., Rundo, J., Shi, L., & Zhou, N. (2024, July 02). Audit Partner Characteristics and Their Impacts on Audit Quality: Evidence from Around the World. In Encyclopedia.
Jiang, Linting, et al. "Audit Partner Characteristics and Their Impacts on Audit Quality: Evidence from Around the World." Encyclopedia. Web. 02 July, 2024.
Peer Reviewed
Audit Partner Characteristics and Their Impacts on Audit Quality: Evidence from Around the World

Public company audits are not homogenous. Varying audit partner attributes, including gender, age, location, and expertise, play important roles in explaining audit outcome disparities. The extant literature underscores the influence of firm-level and office-level differences, in areas such as size, culture, and industry expertise, in shaping audit outcomes. Commonwealth countries, such as the U.K., Australia, New Zealand, and Continental European countries, along with Asian economic entities, mandate the disclosure of audit partner names. Consequently, significant research efforts have been devoted to investigating the impact of audit partner characteristics on audit outcomes in these jurisdictions. With the adoption of Public Company Accounting Oversight Board (PCAOB) Rule 3211, mandating disclosure of audit engagement partner details for U.S.-registered public accounting firms on Form AP, there has been a surge in U.S. firm research exploring the significance of audit partner characteristics on audit outcomes in recent years. This paper outlines research that considers audit partner attributes’ influence on audit partner selection and audit quality across different economic entities. This entry contributes by synthesizing findings from recent research across diverse economic contexts, including the recently available insights from U.S.-based audits. The analysis of this entry not only provides insights into the current state of audit partner research but also delineates avenues for future research on this topic.

audit partner characteristics audit quality global evidence
Auditors play an essential role in validating the accuracy and reliability of financial statements prepared by companies. These statements are a primary input into the financial decisions for a wide spectrum of users, such as investors, creditors, regulators, and the public. Given the broad range of financial statement users, different parties often disagree on what constitutes the “best” disclosure policy. For example, accounting rules on expensing executive option grants reflect a comprise of divergent opinions among several regulatory agencies, such as the Public Company Accounting Oversight Board (PCAOB), the Financial Accounting Standards Board (FASB), the Securities and Exchange Commission (SEC), and the U.S. Congress. In this article, the focus is on regulations in various jurisdictions regarding the disclosure of individual audit partner identities in mandatory financial statements.
Theoretically, the value of audited information depends on the decision facing the economic agent who consumes such accounting information [1], as the preparers and users of audited financial statements are subject to different economic forces and have divergent economic incentives [2][3]. Outside users are not generally privy to the procedures used to conduct any specific audit. For this reason, they rely heavily on the expected framework regarding how audits are conducted rather than having specific knowledge of the audit itself. These expectations are present even after they have used it to make financial decisions (in formal economic terms, financial statements are credence goods) [4][5]. In order to lend credibility to the audit reports, audit firms strive to build a reputation of trustworthiness. The main argument in favor of naming a specific audit partner in an audit report is that it will incentivize audit partners to exert care above and beyond what they would do under anonymity. In turn, this would result in financial statements deemed by investors as being more reliable. The case of Herbalife is a real-world example that illustrates how the disclosure of individual audit partner identities could alternate the outcome of an audit engagement. In 2014, Herbalife’s then auditor, KPMG, was forced to withdraw their audit reports after it was discovered that the lead audit partner was sharing insider information with a golf associate who subsequently traded on such tips. Had the identity of this individual auditor been widely available, the lead audit partner’s social ties would have been subject to greater scrutiny, which might have led to a different audit outcome [6]. Nevertheless, any regulation typically comes with a benefit and a cost. The naming of a specific partner potentially imposes costs on that partner by the possible exposure to greater litigation risk [7]. To mitigate this concern, the U.S. PCAOB changed its initial requirement making audit partners personally sign the financial statements and instead requires them to submit the Form AP directly to the PCAOB [8]. This compromise arrangement balances the costs to the auditor with the benefits to the public.
The availability of audit partner-identifying information provides data for regulators and researchers to observe variability in audit inputs. For example, auditors with characteristics such as professional skepticism, independence, experience, and ongoing professional development, among other physical characteristics, may approach audits differently and obtain different-quality results. Prior empirical studies show that firm-level and office-level details, such as size, culture, and industry specialization, have an impact on audit quality [9]. Given that considerable discourse underscores the importance of understanding individual audit partner characteristics, the number of regulations mandating the disclosure of audit partner identity information continues to grow around the world, which provides researchers with multiple avenues to test these theoretical implications [8]. Historically, Australia, New Zealand, and the U.K. in the Commonwealth; China and Taiwan in Asia; and Belgium, the Netherlands, Sweden, and Finland in Continental Europe have required their filers to disclose audit partner names. In response to this global trend, the U.S. issued PCAOB Rule 3211, requiring audit partner names to be disclosed after 1 January 2017. There are noticeable differences between these locality-specific regulations. For example, China requires two audit partner signatures as part of the audit report, whereas the U.S. only requires a singular audit partner signature. In addition, in smaller concentrated economic markets like Australia and New Zealand, the personal reputation and network of an audit partner might play a more significant role in audit quality compared with larger markets like the U.S. An extant review of audit partner archival research in emerging markets challenges researchers to evaluate their contributions and consider enhanced testing methodologies to better understand audit partner characteristic impacts on audit research [10]. As such, audit partner data from Commonwealth countries, Asian economic entities, and Continental European countries have created a large body of empirical research due to their open access to individual partner characteristics and unique economic settings, creating a path to new U.S.-based audit partner research.
This entry contributes to the literature by synthesizing recent research findings across varied economic contexts and incorporating insights from newly available U.S.-based studies. The emphasis on the legal environment and institutional background from a global perspective distinguishes this entry from other review papers on audit partner research that focuses on partners’ economic incentives, innate characteristics, and governance arrangements [10], or a single country (i.e., China) [11], or research methodology [12]. The following sections are organized by geographic setting, outlining empirical outcomes in the audit partner characteristic space. We additionally highlight some qualitative data that underscore the importance of audit partner characteristics in practical applications.


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Subjects: Business, Finance
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