Audit Quality Effects of an Individual Audit Engagement Partner Signature Mandate

Audit Quality Effects of an Individual Audit Engagement Partner Signature Mandate

By

Allen D. Blay* Florida State University P.O. Box 3061110 Tallahassee, FL 32306-1110 ablay@cob.fsu.edu 850-644-9847 Matthew Notbohm University of North Dakota mnotbohm@business.und.edu Caren Schelleman Maastricht University c.schelleman@maastrichtuniversity.nl Adrian Valencia Florida Gulf Coast University avalencia@fgcu.edu * Contact author Acknowledgements: We appreciate helpful comments from Kenny Reynolds, TJ Atwood, Ryan Huston, Clive Lennox and workshop participants at Florida State University, the University of South Florida, and the AAA 2011 Annual Meeting.

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Electronic copy available at: http://ssrn.com/abstract=2044817

Audit Quality Effects of an Individual Audit Engagement Partner Signature Mandate

ABSTRACT: The European Union recently mandated that audit engagement partners sign their name to the audit opinion. However, there is little evidence demonstrating whether such a mandate had any influence on audit quality. We examine the audit quality effects of a partner signature mandate by comparing multiple measures of audit quality in the Netherlands, a country with no tradition of partner signatures, to the audit quality in years prior to adoption, as well as to the United Kingdom, a country with a similar legal and accounting environment, but which did not adopt partner level signatures at the same time. We detect no substantial change in audit quality using multiple measures and sample selection criteria. Our results support the arguments of practitioners who believe that mandatory partner signatures will not influence audit quality. KEYWORDS: audit quality; mandatory partner-level signatures; accruals; regulation. DATA AVAILABILITY: All data are available from public sources

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Electronic copy available at: http://ssrn.com/abstract=2044817

I. INTRODUCTION Over the past decade, many countries (Australia, Taiwan, and China), in addition to the...