Skill Demands in the Audit Labor Market: Evidence from Job Postings

• In Event: Human Capital

Abstract

This study examines how the demand for auditor skill sets has changed over the past decade as well as how these changes relate to audit quality and audit fees. Using a novel dataset that contains the near-universe of online job postings by accounting firms from 2007 to 2017, we find that audit firms have decreased their demand for auditors and increased their demand for IT-related personnel. We also find that audit firms are demanding expanded skill sets from their auditors— in addition to financial skills, firms increasingly demand cognitive, social, and IT-related skills. We document substantial variation in the demand for skills not only across audit firms, but also across offices within an audit firm. More importantly, these differences in skill requirements have a significant effect on audit quality. Specifically, clients of audit offices that demand more social and cognitive skills are less likely to experience subsequent restatements. Taken together, our findings provide new insights on the changing dynamics of the auditor labor market and their relation to audit quality.

Authors

• Charles Ham, Washington University in St. Louis

• Rebecca Hann, University of Maryland-College Park

• MaryJane Rabier, Washington University in St. Louis

• Wenfeng Wang, City University of Hong Kong