Audit Partners’ Co-Working Experience and Audit Outcomes

Abstract

Issues related to audit team personnel and the resultant effects on audit outcomes have not been investigated widely with archival data due to data unavailability. In this study, we examine whether and how increases in co-working experience between the lead and the concurring partners impact engagement audit quality and audit efficiency. A priori, increases in co-working experience could increase or decrease audit quality. In contrast, we expect increases in co-working experience will increase audit efficiency. Using a unique setting, Taiwan, where the identities of these two partners are known, we find increases in co-working experience are positively associated with audit quality and audit efficiency. Our results are robust to alternative measures of co-working experience and audit quality and to controlling for potentially omitted variables and selection bias. Further tests show that the effects of co-working experience on audit quality and audit efficiency are more pronounced when client audit risk is higher, the audit firm is not an industry expert, audit firm tenure is relatively shorter, and the two audit partners more consistently serve in only one role.