Cost of mandatory audit partner rotation: The influence of five-year rotation and seven-year rotation on audit timeliness

Abstract

This paper investigates whether the first year of incoming partner following mandatory periodic audit partner rotation causes longer audit report lag Results indicate there is no association between mandatory rotation and audit report lag This result suggests that newly rotated partners can utilize the rest of the engagement team’s experience and audit firms’ client-speci?c knowledge accumulated from continuous relationships between audit firms and corporate clients to make up for the personal lack of client-speci?c knowledge and experience Further we examine how mandatory rotation is associated to audit timeliness in Big4 and non-Big4 firms Results indicate the partner rotation would cause longer audit report lag in non-Big 4 firms This association especially appear in the smaller clients of non-Big 4 audit ?rms In addition each five-year and seven-year partner rotation is similarly associated with audit report lag This result indicates the longer non-Big 4 firm tenures does not improve the audit timeliness and the addition cost of partner rotation takes the form of audit report lag will persist over the successive rotations

Date of Award	2020
Original language	English
Supervisor	Yu-Ting Hsieh (Supervisor)