Auditor Partner Tenure and Cost of Equity Capital
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Azizkhani, Masoud; Shailer, Gregory; Monroe, Gary
Description
We examine whether audit engagement partner tenure and rotation affect investors' perceptions, as proxied by the ex ante cost of equity capital. We find that partner tenure has a nonlinear relation with the ex ante cost of equity capital for non-Big 4 audit engagements prior to the introduction of partner rotation requirements, and that the imputed gains from partner tenure appear similar to the imputed gains of having a Big 4 auditor. Consistent with the tenure results, we also find that...[Show more]
dc.contributor.author | Azizkhani, Masoud | |
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dc.contributor.author | Shailer, Gregory | |
dc.contributor.author | Monroe, Gary | |
dc.date.accessioned | 2015-12-08T22:37:39Z | |
dc.identifier.issn | 0278-0380 | |
dc.identifier.uri | http://hdl.handle.net/1885/35614 | |
dc.description.abstract | We examine whether audit engagement partner tenure and rotation affect investors' perceptions, as proxied by the ex ante cost of equity capital. We find that partner tenure has a nonlinear relation with the ex ante cost of equity capital for non-Big 4 audit engagements prior to the introduction of partner rotation requirements, and that the imputed gains from partner tenure appear similar to the imputed gains of having a Big 4 auditor. Consistent with the tenure results, we also find that partner rotation is associated with increased ex ante cost of equity capital. Our results are very robust to a variety of sensitivity tests and raise important questions for future research. It is not known to what extent investors or analysts are aware of the audit partner's identity or pay attention to audit partner tenure; if investors or analysts do not consider partner tenure, future research may identify omitted variables that have the same nonlinear relationship with the ex ante cost of capital that we observe for non-Big 4 audit partner tenure. | |
dc.publisher | American Accounting Association | |
dc.source | Auditing: A Journal of Practice and Theory | |
dc.subject | Keywords: Audit partner rotation; Audit partner tenure; Cost of capital; Financial reporting credibility | |
dc.title | Auditor Partner Tenure and Cost of Equity Capital | |
dc.type | Journal article | |
local.description.notes | Imported from ARIES | |
local.identifier.citationvolume | 32 | |
dc.date.issued | 2013 | |
local.identifier.absfor | 150102 - Auditing and Accountability | |
local.identifier.ariespublication | u4602557xPUB126 | |
local.type.status | Published Version | |
local.contributor.affiliation | Azizkhani, Masoud, College of Business and Economics, ANU | |
local.contributor.affiliation | Shailer, Gregory, College of Business and Economics, ANU | |
local.contributor.affiliation | Monroe, Gary, University of New South Wales | |
local.description.embargo | 2037-12-31 | |
local.bibliographicCitation.issue | 1 | |
local.bibliographicCitation.startpage | 183 | |
local.bibliographicCitation.lastpage | 202 | |
local.identifier.doi | 10.2308/ajpt-50308 | |
local.identifier.absseo | 900202 - Professional, Scientific and Technical Services | |
dc.date.updated | 2016-02-24T11:12:45Z | |
local.identifier.scopusID | 2-s2.0-84873668425 | |
local.identifier.thomsonID | 000314734400007 | |
Collections | ANU Research Publications |
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