Do School Ties between Audit Partners and Clients Impact Audit Outcomes? Evidence from the United States

• In Event: Audit Partner Characteristics and Audit Quality

Abstract

Using recently disclosed U.S. audit partner data, we examine the effects of school ties between audit engagement partners and client executives/board members in the United States. We consider a partner and the client to share a school tie if the engagement partner attended the same university as the top executives or the board members of the client they serve. We fail to find evidence of impaired audit quality when there is a school tie between partners and executives/directors. In fact, we find some evidence to suggest that audit quality is higher when partner-client ties are present. This result seems to indicate that school ties facilitate better knowledge and information transfers between partners and clients. Furthermore, we find lower audit fees charged in the presence of a school tie, suggesting greater audit efficiencies.

Authors

• Chan Li, University of Pittsburgh

• Lauren Carse Reid, Wake Forest University

• Nam Ho, Brock University

• Feng Guo, Iowa State University