The Impact of Job Satisfaction on Audit Quality

• In Event: Continental Breakfast & Research and Education Forum
  In Paper Session: Table 1: Audit Quality

Abstract

I study whether audit employee job satisfaction affects audit quality using a novel dataset on job satisfaction and a natural experiment based on local precipitation. I observe auditor job satisfaction at the audit firm office level, which allows me to examine variation in satisfaction levels within the audit firm, and also over time for the same audit office. My restrictive sets of fixed effects also exclude alternative explanations pertaining to trends happening at the city, industry and audit firm levels. I find that one unit increase in job satisfaction level (on a scale from 1 to 5) improves about 80% of one standard deviation in audit quality. My analysis suggests that auditor job satisfaction is an important determinant of firms’ information environment and provides further evidence linking sentiment and job performance.

Author

• Phong Truong, Carnegie Mellon University