Does the Disclosure of an Audit Engagement Partner’s Name Improve the Audit Quality? A Difference-in-Difference Analysis

On 15 December 2015, the Public Company Accounting Oversight Board (PCAOB) passed Rule 3211, requiring audit firms registered with PCAOB in the U.S. to disclose the audit engagement partner’s name in the Form AP, effective 31 January 2017. The regulation aims to improve the transparency and quality...

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Autores principales:	Kose John, Min (Shirley) Liu
Formato:	article
Lenguaje:	EN
Publicado:	MDPI AG 2021
Materias:	Rule 3211 PCAOB audit quality audit fees difference-in-difference auditor independence Risk in industry. Risk management HD61 Finance HG1-9999
Acceso en línea:	https://doaj.org/article/f097b2d041de4b0eb022ef479b7ae40f
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spelling	oai:doaj.org-article:f097b2d041de4b0eb022ef479b7ae40f2021-11-25T18:08:24ZDoes the Disclosure of an Audit Engagement Partner’s Name Improve the Audit Quality? A Difference-in-Difference Analysis10.3390/jrfm141105081911-80741911-8066https://doaj.org/article/f097b2d041de4b0eb022ef479b7ae40f2021-10-01T00:00:00Zhttps://www.mdpi.com/1911-8074/14/11/508https://doaj.org/toc/1911-8066https://doaj.org/toc/1911-8074On 15 December 2015, the Public Company Accounting Oversight Board (PCAOB) passed Rule 3211, requiring audit firms registered with PCAOB in the U.S. to disclose the audit engagement partner’s name in the Form AP, effective 31 January 2017. The regulation aims to improve the transparency and quality of audits, thereby increasing investors’ confidence in financial statements. Using the audit firms registered with the PCAOB and their clients as the treated sample, we employed a difference-in-difference analysis to investigate whether and the extent to which implementing Rule 3211 impacts audit quality and audit costs. We compared the audit quality (proxied by the abnormal discretionary accruals quality, the probability of restating the financial statements, and the ratio of the audit fees to the total fees) and audit costs (proxied by the total audit fees) from one year (up to three years) pre- to one year (up to three years) post-Rule 3211, to a control sample (comprised of U.K. audit firms, which were not subject to such regulation during the sample period). The empirical results generally indicate that there was an increase in the audit quality and in the audit costs from the pre- to the post-Rule 3211 period and also suggest that auditor independence increased in the post-regulation period compared to the pre-regulation period. Our empirical results are new and contribute to the research on the PCAOB and audits.Kose JohnMin (Shirley) LiuMDPI AGarticleRule 3211PCAOBaudit qualityaudit feesdifference-in-differenceauditor independenceRisk in industry. Risk managementHD61FinanceHG1-9999ENJournal of Risk and Financial Management, Vol 14, Iss 508, p 508 (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	Rule 3211 PCAOB audit quality audit fees difference-in-difference auditor independence Risk in industry. Risk management HD61 Finance HG1-9999
spellingShingle	Rule 3211 PCAOB audit quality audit fees difference-in-difference auditor independence Risk in industry. Risk management HD61 Finance HG1-9999 Kose John Min (Shirley) Liu Does the Disclosure of an Audit Engagement Partner’s Name Improve the Audit Quality? A Difference-in-Difference Analysis
description	On 15 December 2015, the Public Company Accounting Oversight Board (PCAOB) passed Rule 3211, requiring audit firms registered with PCAOB in the U.S. to disclose the audit engagement partner’s name in the Form AP, effective 31 January 2017. The regulation aims to improve the transparency and quality of audits, thereby increasing investors’ confidence in financial statements. Using the audit firms registered with the PCAOB and their clients as the treated sample, we employed a difference-in-difference analysis to investigate whether and the extent to which implementing Rule 3211 impacts audit quality and audit costs. We compared the audit quality (proxied by the abnormal discretionary accruals quality, the probability of restating the financial statements, and the ratio of the audit fees to the total fees) and audit costs (proxied by the total audit fees) from one year (up to three years) pre- to one year (up to three years) post-Rule 3211, to a control sample (comprised of U.K. audit firms, which were not subject to such regulation during the sample period). The empirical results generally indicate that there was an increase in the audit quality and in the audit costs from the pre- to the post-Rule 3211 period and also suggest that auditor independence increased in the post-regulation period compared to the pre-regulation period. Our empirical results are new and contribute to the research on the PCAOB and audits.
format	article
author	Kose John Min (Shirley) Liu
author_facet	Kose John Min (Shirley) Liu
author_sort	Kose John
title	Does the Disclosure of an Audit Engagement Partner’s Name Improve the Audit Quality? A Difference-in-Difference Analysis
title_short	Does the Disclosure of an Audit Engagement Partner’s Name Improve the Audit Quality? A Difference-in-Difference Analysis
title_full	Does the Disclosure of an Audit Engagement Partner’s Name Improve the Audit Quality? A Difference-in-Difference Analysis
title_fullStr	Does the Disclosure of an Audit Engagement Partner’s Name Improve the Audit Quality? A Difference-in-Difference Analysis
title_full_unstemmed	Does the Disclosure of an Audit Engagement Partner’s Name Improve the Audit Quality? A Difference-in-Difference Analysis
title_sort	does the disclosure of an audit engagement partner’s name improve the audit quality? a difference-in-difference analysis
publisher	MDPI AG
publishDate	2021
url	https://doaj.org/article/f097b2d041de4b0eb022ef479b7ae40f
work_keys_str_mv	AT kosejohn doesthedisclosureofanauditengagementpartnersnameimprovetheauditqualityadifferenceindifferenceanalysis AT minshirleyliu doesthedisclosureofanauditengagementpartnersnameimprovetheauditqualityadifferenceindifferenceanalysis
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Does the Disclosure of an Audit Engagement Partner’s Name Improve the Audit Quality? A Difference-in-Difference Analysis

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