Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/310525 
Year of Publication: 
2013
Citation: 
[Journal:] Journal of Accounting and Management Information Systems (JAMIS) [ISSN:] 2559-6004 [Volume:] 12 [Issue:] 2 [Year:] 2013 [Pages:] 263-279
Publisher: 
Bucharest University of Economic Studies, Bucharest
Abstract: 
We investigate whether audit partner tenure and audit quality associations remain significant after the implementation of mandatory audit partner rotation. Carey and Simnett (2006) report a significant negative association between long audit partner tenure and the propensity to issue qualified going-concern opinions for financially distressed companies. However, their study uses data from a period when there was no restriction on the length of audit partner tenure, i.e., from a period before there was mandatory audit partner rotation after a fixed period of time. We revisit this issue using Australian data from a period after the introduction of mandatory audit partner rotation. We find a significant positive association between audit partner tenure when tenure is five years or more and the likelihood of an auditor issuing a going-concern opinion for a financially distressed company. Our findings provide evidence that auditors are more likely to issue qualified going-concern opinions for financially distressed companies when there is mandatory audit partner rotation after a fixed period of time. Our findings suggest that the implementation of mandatory audit partner rotation has improved audit quality.
Subjects: 
going-concern opinion
audit partner tenure
distressed companies
mandatory rotation
JEL: 
G34
M41
M42
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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