The effect of companies' employment of their ex-auditors on their audit quality : evidence from UK
Author
al-Adawi, Layla Muhammad al-Shawadfi
Source
Science Journal for Commercial Research
Issue
Vol. 44, Issue 1 (31 Jan. 2022), pp.9-42, 34 p.
Publisher
Menoufia University Faculty of Commerce
Publication Date
2022-01-31
Country of Publication
Egypt
No. of Pages
34
Main Subjects
Topics
Abstract EN
The UK regulatory bodies mandated two years cooling off period before the former audit team members can hold a managerial position within the client firm.
The pertinent literatures indicate mixed results around the implications of the companies' employment of their ex-auditors or what is called Auditor to Client Revolving Door practise (ACRD) on the audit quality.
The aim of this paper is to examine the effect of ACRD hires on the audit quality for UK FTSE100 companies for the period from 2008 to 2018.
Using the Kothari et al.
(2005) model to calculate the olute value of abnormal accruals, I found that companies with ACRD hires demonstrates lower levels of the olute accruals compared to other companies with no ACRD hires.
This indicates the positive, rather than negative, effect of ACRD employment on the audit quality.
Further insights on the corporate hierarchal positions of the ACRD hires reveals that the affiliated non-executive directors that are members in the audit committees significantly reduce the levels of the olute accruals, highlighting their oversight and governance role.
I also do find the inescapable of the cooling-off period in enhancing the audit quality for the companies with affiliated compared to those with non-affiliated hires.
American Psychological Association (APA)
al-Adawi, Layla Muhammad al-Shawadfi. 2022. The effect of companies' employment of their ex-auditors on their audit quality : evidence from UK. Science Journal for Commercial Research،Vol. 44, no. 1, pp.9-42.
https://search.emarefa.net/detail/BIM-1396922
Modern Language Association (MLA)
al-Adawi, Layla Muhammad al-Shawadfi. The effect of companies' employment of their ex-auditors on their audit quality : evidence from UK. Science Journal for Commercial Research Vol. 44, no. 1 (Jan. 2022), pp.9-42.
https://search.emarefa.net/detail/BIM-1396922
American Medical Association (AMA)
al-Adawi, Layla Muhammad al-Shawadfi. The effect of companies' employment of their ex-auditors on their audit quality : evidence from UK. Science Journal for Commercial Research. 2022. Vol. 44, no. 1, pp.9-42.
https://search.emarefa.net/detail/BIM-1396922
Data Type
Journal Articles
Language
English
Notes
-
Record ID
BIM-1396922