Abstract
Purpose – To determine the effect of audit firm rotation and/or audit partner rotation on individuals' confidence in the quality of audited financial statements.Design/methodology/approach – Two separate behavioral studies were conducted with participants from the business and legal community (MBA and law students). In each study, one‐way analysis of variance was conducted using a between‐subjects approach. The independent measure was auditor rotation; the dependent measure was participants' responses to questions regarding company earnings. Because an experimental approach was utilized, the stimulus materials excluded potentially relevant information for this task. In addition, the participants were not held accountable for their decisions, nor was there any explicit motivation provided. Future research could explore other richer more complex case scenarios that provides some explicit motivation for participants.Findings – Results revealed that even in an environment of strong controls for corporate gove...
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