The Effect of Joint Auditor Pair Composition on Audit Quality: Evidence from Impairment Tests
Lobo, Gerald J.; Paugam, Luc; Zhang, Dana; Casta, Jean-François (2017), The Effect of Joint Auditor Pair Composition on Audit Quality: Evidence from Impairment Tests, Contemporary Accounting Research, 34, 1, p. 118-153. 10.1111/1911-3846.12244
TypeArticle accepté pour publication ou publié
Journal nameContemporary Accounting Research
MetadataShow full item record
Author(s)Lobo, Gerald J.
ESSEC Business School
Dauphine Recherches en Management [DRM]
Abstract (EN)Using a sample of firms from France, where the law requires the use of two auditors, we study the effect of auditor pair composition on audit quality by examining a specific account, goodwill impairment. We document that firms audited by a Big 4–non‐Big 4 auditor pair (BS) are more likely to book an impairment and book a larger impairment than firms audited by a Big 4–Big 4 auditor pair (BB) when low‐performance indicators suggest a greater likelihood of impairment. Moreover, firms audited by a BB pair reduce impairment disclosures when they book impairments, while firms audited by a BS pair do not, suggesting lower transparency for firms audited by a BB pair. Our results inform investors and firms in mandatory joint audit regimes, as well as regulators who are considering requiring joint audits.
Subjects / KeywordsJoint Audit; Audit Quality; Conservatism; Impairment Testing
JELM41 - Accounting
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