AAA Spark Meeting of Regions

How Do Leadership Roles Influence the Quality of Audit Partners’ Engagements

• In Event: How Audit Partner Skills and Style Impact the Audit

Abstract

Despite the commonality of being both owners and agents, partners’ roles and responsibilities in accounting firms can vary significantly. In this study, we first conduct 21 semi-structured interviews of audit partners who have held office, regional, or national leadership roles to understand how leaders are selected and evaluated, as well as the responsibilities for each type of leadership role. The results suggest that leadership roles entail significant responsibility for business growth and development, which has the potential to influence these partners’ objective functions. Using a hand-collected dataset, we empirically examine how audit partners’ leadership roles influence their audits. Consistent with a focus on business growth and development, we find that clients of audit partners in leadership roles pay higher audit and non-audit fees. However, these partners’ clients are more likely to subsequently restate their financial statements. Further analyses suggests that capacity constraints influence this association.

Authors

• Aleksandra B Zimmerman, Florida State University

• Timothy Andrew Seidel, Brigham Young University

• Michael J Mowchan, Baylor University