THESIS
2016
Abstract
This study investigates whether concerns about post-retirement job opportunities incentivize individual auditors to supply high quality audits. We find that being sanctioned by the government, experiencing client restatements or allowing more discretionary accruals in client financial reports significantly reduce an auditor’s chances of acquiring corporate board memberships after leaving the audit profession. In contrast, being an industry specialist helps an auditor become a board member of a listed firm after retirement. Providing good (poor) audit quality also increases (decreases) the number of board memberships and the total pay obtained by a retired auditor during the post-retirement period. We further find that it is not only the audit quality immediately before retirement, but a...[
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This study investigates whether concerns about post-retirement job opportunities incentivize individual auditors to supply high quality audits. We find that being sanctioned by the government, experiencing client restatements or allowing more discretionary accruals in client financial reports significantly reduce an auditor’s chances of acquiring corporate board memberships after leaving the audit profession. In contrast, being an industry specialist helps an auditor become a board member of a listed firm after retirement. Providing good (poor) audit quality also increases (decreases) the number of board memberships and the total pay obtained by a retired auditor during the post-retirement period. We further find that it is not only the audit quality immediately before retirement, but also throughout the auditor’s entire career that affects his/her post-retirement opportunities. These findings suggest that ex post labor market settlements give individual auditors ex ante incentives to perform high quality audits.
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