In this study, we investigate whether engagement partners who participate in the national auditing standard setting can provide better audit quality, and explore the underlying cause in the context of Taiwan, where the name of engagement partners can be identified in audit reports. The empirical results indicate that firms audited by incumbent Auditing Standards Committee (ASC) member auditors are associated with lower discretionary accruals and a lower probability of having small profits. The results support the view that concerns about the impairments of increased reputational capital may be the most likely cause that explains the ASC member auditors’ better audit quality. This study also provides the benefits that can arise from the identification of engagement partners.
All Science Journal Classification (ASJC) codes
- Economics and Econometrics