Prior studies commonly use an auditor's market share in an industry as a proxy for auditor industry expertise and find that audit quality is positively related to an audit partner's within-industry market shar...Prior studies commonly use an auditor's market share in an industry as a proxy for auditor industry expertise and find that audit quality is positively related to an audit partner's within-industry market share in a voluntary audit partner rotation regime where the length of the client-partner relationship is not limited.Mandatory audit partner rotation,however,limits the length of the client-partner relationship and can artificially increase or decrease the market shares of incoming and departing partners,thus making the audit partner's within-industry market share an unreliable proxy for auditor industry expertise.Using a sample of banks in Taiwan,China,we find that audit quality is positively related to an audit partner's within-industry market share in the voluntary audit partner rotation regime.However,such a positive relation disappears in the mandatory audit partner rotation regime.Thus,we conclude that mandatory audit partner rotation decouples the link between an audit partner's within-industry market share and auditor industry expertise and caution researchers against using an audit partner's within-industry market share as a proxy for auditor industry expertise in a mandatory audit partner rotation regime.展开更多
文摘Prior studies commonly use an auditor's market share in an industry as a proxy for auditor industry expertise and find that audit quality is positively related to an audit partner's within-industry market share in a voluntary audit partner rotation regime where the length of the client-partner relationship is not limited.Mandatory audit partner rotation,however,limits the length of the client-partner relationship and can artificially increase or decrease the market shares of incoming and departing partners,thus making the audit partner's within-industry market share an unreliable proxy for auditor industry expertise.Using a sample of banks in Taiwan,China,we find that audit quality is positively related to an audit partner's within-industry market share in the voluntary audit partner rotation regime.However,such a positive relation disappears in the mandatory audit partner rotation regime.Thus,we conclude that mandatory audit partner rotation decouples the link between an audit partner's within-industry market share and auditor industry expertise and caution researchers against using an audit partner's within-industry market share as a proxy for auditor industry expertise in a mandatory audit partner rotation regime.
