THE EFFECTS OF AUDIT FIRM ROTATION ON EARNINGS QUALITY
THE EFFECTS OF AUDIT FIRM ROTATION ON EARNINGS QUALITY

Summary/Abstract: Over the past decade, there has been increasing evidence describing abnormal accruals and earnings response coefficients as proxies for audit quality, the effect that the length of the auditor-client tenure has had on audit quality, audit procurement mechanisms such as rotation of the audit firm or the audit partner, and the pros and cons of long-term auditor-client relationships. The objective of this paper is to emphasize the quality of audited earnings around the rotation event, the cost of mandatory auditor rotation, earnings management and auditor rotation in the public sector, and effects of audit firm rotation on financial accounting and audit quality.

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