2022 Fiscal Year Annual Research Report
The Effect of the Big 4 to Big 3 Audit Market Transition on Initial Year Audit Fee, Client Bargaining Power, Audit Quality and Client Following Audit Partners
| Project/Area Number |
20K13654
|
|---|
| Research Institution | Nagoya University of Commerce & Business |
|---|
Principal Investigator |
Frendy 名古屋商科大学, 商学部, 准教授 (00825218)
|
|---|
| Project Period (FY) |
2020-04-01 – 2023-03-31
|
| Keywords | Audit quality / Audit pricing / Audit report lags / Partner experience |
|---|
| Outline of Annual Research Achievements |
Our study examined changes in the composition of Japanese audit partners to proxy for the continuity of the audit. We analyzed the effect of audit team continuity on audit outcomes (audit quality and report lags), pricing and its determinant (lead partner experience), which have not been thoroughly examined in previous studies. The study employs a sample of 26,007 firm-years of listed Japanese companies from 2008 to 2019.
The study reveals that audit team continuity represents an important determinant of audit fee. For clients of large audit firms, companies with higher (lower) audit team continuity issue audit reports in less (more) time. The experience of lead partners strongly predicts audit team continuity. Audit quality is not associated with audit team continuity.
|
