What’s in a Name? Initial Evidence of U.S. Audit Partner Identification Using Difference-in-Differences Analyses.

• In Event: Audit Partner

Abstract

Under the premise that audit partner identification would improve accountability and transparency, the PCAOB implemented Rule 3211 to capture partner names for audits of publicly-traded companies in Form AP. A natural question is whether this rule was effective in motivating partners to improve audit quality, and whether it resulted in additional costs to companies. As with many studies examining the effect of new regulation, it is difficult to separate changes due to Rule 3211 from changes due to general macroeconomic trends. To address this concern, we examine the impact of U.S. audit partner identification using difference-in-differences analyses with separate control groups, including a novel, hand-collected dataset of U.S. companies that voluntarily disclosed the audit partner name prior to Form AP. Collectively, we do not find consistent evidence of a change in audit quality or fees for the treatment group relative to each control group following mandatory partner identification in Form AP.

Authors

• Lauren Dreher Cunningham, University of Tennessee

• Chan Li, University of Pittsburgh

• Sarah E Stein, Virginia Tech

• Nicole Wright, James Madison University