Does Client Acquisition Impair the Objectivity of Engagement Partners and Engagement Quality Review Partners?

References

• Ayers, S., & Kaplan, S. E. (2003). Review partners’ reactions to contact partner risk judgments of prospective clients. Auditing: A Journal of Practice & Theory, 22(1), 29–45. https://doi.org/10.2308/aud.2003.22.1.29
   Web of Science ®Google Scholar
• Bamber, E. M., & Iyer, V. M. (2007). Auditors’ identification with their clients and its effect on auditors’ objectivity. Auditing: A Journal of Practice & Theory, 26(2), 1–24. https://doi.org/10.2308/aud.2007.26.2.1
   Web of Science ®Google Scholar
• Bedard, J. C., & Johnstone, K. M. (2004). Earnings manipulation risk, corporate governance risk, and auditors’ planning and pricing decisions. The Accounting Review, 79(2), 277–304. https://doi.org/10.2308/accr.2004.79.2.277
   Web of Science ®Google Scholar
• Blay, A. D. (2005). Independence threats, litigation risk, and the auditor's decision process. Contemporary Accounting Research, 22(4), 759–789. https://doi.org/10.1506/5FQ9-ANEA-T8J0-U6GY
   Web of Science ®Google Scholar
• Bouwens, J., Bik, O., & Zou, Y. (2019). Determinants of audit partner compensation. Working paper.
   Google Scholar
• Coram, P. J., & Robinson, M. J. (2017). Professionalism and performance incentives in accounting firms. Accounting Horizons, 31(1), 103–123. https://doi.org/10.2308/acch-51636
   Web of Science ®Google Scholar
• Dodgson, M. K., Agoglia, C. P., Bennet, G. B., & Cohen, J. R. (2020). Managing the auditor-client relationship through partner rotations: The experiences of audit firm partners. The Accounting Review, 95(2), 89–111. https://doi.org/10.2308/accr-52556
   Web of Science ®Google Scholar
• Dowling, C., Knechel, W. R., & Moroney, R. (2018). Public oversight of audit firms: The slippery slope of enforcing regulation. Abacus, 54(3), 353–380. https://doi.org/10.1111/abac.12130
   Web of Science ®Google Scholar
• Epps, K. K., & Messier Jr, W. F. (2007). Engagement quality reviews: A comparison of audit firm practices. Auditing: A Journal of Practice & Theory, 26(2), 167–181. https://doi.org/10.2308/aud.2007.26.2.167
   Web of Science ®Google Scholar
• European Union (EU). (2014). L 158: Regulation (EU) no 537/2014 of the European parliament and of the council of 16 April 2014 on specific requirements regarding statutory audit of public-interest entities and repealing commission decision 2005/909/EC (1). Official Journal of the European Union, 57, 77–112.
   Google Scholar
• Favere-Marchesi, M., & Emby, C. E. (2005). The impact of continuity on concurring partner reviews: An exploratory study. Accounting Horizons, 19(1), 1–10. https://doi.org/10.2308/acch.2005.19.1.1
   Google Scholar
• Financial Supervisory Commission, Taiwan. (2018). Report on the Survey of the CPA Service Industry in Taiwan. Financial Supervisory Commission, Taiwan.
   Google Scholar
• Fiolleau, K., Hoang, K., Jamal, K., & Sunder, S. (2013). How do regulatory reforms to enhance auditor independence work in practice? Contemporary Accounting Research, 30(3), 864–890. https://doi.org/10.1111/1911-3846.12004
   Web of Science ®Google Scholar
• Gelman, A. (2006). Prior distributions for variance parameters in hierarchical models (comment onarticle by browne and draper). Bayesian Analysis, 1(3), 515–533. https://doi.org/10.1214/06-BA117A
   Web of Science ®Google Scholar
• Gelman, A., Carlin, J. B., Stern, H. S., Dunson, D. B., Vehtari, A., & Rubin, D. B. (2013). Bayesian Data analysis. CRC press.
   Google Scholar
• Hackenbrack, K., & Nelson, M. W. (1996). Auditors’ incentives and their application of financial accounting standards. The Accounting Review, 71(1), 43–59.
   Web of Science ®Google Scholar
• International Auditing and Assurance Standards Board (IAASB). (2009). Quality control for firms that perform audits and reviews of financial statements, and other Assurance and related services engagements. International Standard on Quality Control (ISQC) 1, 1–70, IAASB. https://www.ifac.org/system/files/downloads/a007-2010-iaasb-handbook-isqc-1.pdf
   Google Scholar
• International Auditing and Assurance Standards Board (IAASB). (2020). Engagement Quality Reviews. International Standards on Quality Management (ISQM) 2, IAASB.
   Google Scholar
• Jeffreys, H. (1961). Theory of probability. 3rd edition. Oxford University Press.
   Google Scholar
• Johnstone, K. M., & Bedard, J. C. (2003). Risk management in client acceptance decisions. The Accounting Review, 78(4), 1003–1025. https://doi.org/10.2308/accr.2003.78.4.1003
   Web of Science ®Google Scholar
• Kadous, K., Kennedy, S. J., & Peecher, M. E. (2003). The effect of quality assessment and directional goal commitment on auditors’ acceptance of client-preferred accounting methods. The Accounting Review, 78(3), 759–778. https://doi.org/10.2308/accr.2003.78.3.759
   Web of Science ®Google Scholar
• Knechel, W. R., Neimi, L., & Zerni, M. (2013). Empirical evidence on implicit determinants of compensation in Big 4 audit partnerships. Journal of Accounting Research, 51(2), 349–387. https://doi.org/10.1111/1475-679X.12009
   Web of Science ®Google Scholar
• Koch, C., & Salterio, S. E. (2017). The effects of auditor affinity for client and perceived client pressure on auditor proposed adjustments. The Accounting Review, 92(5), 117–142. https://doi.org/10.2308/accr-51703
   Web of Science ®Google Scholar
• Kraussman, M., & Messier, W. F. (2015). An updated analysis of enforcement actions against engagement quality reviewers. Current Issues in Auditing, 9(2), A1–A12. https://doi.org/10.2308/ciia-51142
   Google Scholar
• Kruschke, J. (2015). Doing Bayesian Data Analysis: A tutorial with R, JAGS, and stan. Academic Press.
   Google Scholar
• Kruschke, J. K. (2010). What to believe: Bayesian methods for data analysis. Trends in Cognitive Sciences, 14(7), 293–300. https://doi.org/10.1016/j.tics.2010.05.001
   PubMed Web of Science ®Google Scholar
• Kunda, Z. (1990). The case for motivated reasoning. Psychological Bulletin, 108(3), 480–498. https://doi.org/10.1037/0033-2909.108.3.480
   PubMed Web of Science ®Google Scholar
• Lee, M. D., & Wagenmakers, E. J. (2013). Bayesian Cognitive modeling: A practical course. Cambridge University Press.
   Google Scholar
• Lennox, C., Wang, C., & Wu, X. (2020). Opening up the “black Box” of audit firms: The effects of audit partner ownership on audit adjustments. Journal of Accounting Research, 58(5), 1299–1341. https://doi.org/10.1111/1475-679X.12333
   Web of Science ®Google Scholar
• Libby, R., & Trotman, K. T. (1993). The review process as a control for differential recall of evidence in auditor judgments. Accounting, Organizations and Society, 18(6), 559–574. https://doi.org/10.1016/0361-3682(93)90003-O
   Web of Science ®Google Scholar
• Messier Jr, W. F., Kozloski, M., & Kochetova-Kozloski, N. (2010). An analysis of SEC and PCAOB enforcement actions against engagement quality reviewers. Auditing: A Journal of Practice & Theory, 29(2), 233–252. https://doi.org/10.2308/aud.2010.29.2.233
   Web of Science ®Google Scholar
• Mintzberg, H. (1980). Structure in 5’s: A synthesis of the research on organization design. Management Science, 26(3), 322–341. https://doi.org/10.1287/mnsc.26.3.322
   Web of Science ®Google Scholar
• Mintzberg, H. (1993). Structure in fives: Designing effective organizations. Prentice-Hall. Inc.
   Google Scholar
• Mintzberg, H. (2009). Tracking strategies: Toward a general theory of strategy formation. Oxford University Press.
   Google Scholar
• Peecher, M. E. (1996). The influence of auditors’ justification processes on their decisions: A cognitive model and experimental evidence. Journal of Accounting Research, 34(1), 125–140. https://doi.org/10.2307/2491335
   Web of Science ®Google Scholar
• PricewaterhouseCoopers. (2011). Letter from PwC to the PCAOB: PCAOB rulemaking docket No. 37, Concept release on auditor independence and audit firm rotation. Available at https://pcaobus.org/Rulemaking/Docket037/429_PwC.pdf
   Google Scholar
• Public Company Accounting Oversight Board (PCAOB). (2009). Engagement Quality Review. Auditing Standard (AS) No. 1220. Washington, DC: PCAOB. https://pcaobus.org/Standards/Auditing/Pages/AS1220.aspx
   Google Scholar
• Public Company Accounting Oversight Board (PCAOB). (2012). Transcript: Public meeting on auditor independence and audit firm rotation. Available at: https://pcaobus.org/Rulemaking/Docket037/2012-10-18_Transcript_ Houston.pdf
   Google Scholar
• Ricchiute, D. N. (1999). The effect of audit seniors’ decisions on working paper documentation and on partners’ decisions. Accounting, Organizations and Society, 24(2), 155–172. https://doi.org/10.1016/S0361-3682(98)00029-4
   Web of Science ®Google Scholar
• Rich, J. S. (2004). Reviewers’ responses to expectations about the client and the preparer. The Accounting Review, 79(2), 497–517. https://doi.org/10.2308/accr.2004.79.2.497
   Web of Science ®Google Scholar
• Schneider, A., Church, B. K., & Ramsay, R. J. (2003). Concurring partner review: Does involvement in audit planning affect objectivity? Research in Accounting Regulation, 16, 185–195. https://doi.org/10.1016/S1052-0457(02)16011-5
   Google Scholar
• Schneider, A., & Messier, W. F. (2007). Engagement quality review: Insights from the academic literature. Managerial Auditing Journal, 22(8), 823–839. https://doi.org/10.1108/02686900710819661
   Google Scholar
• Stringer, G. L. (2011). Letter from Kimball International to the PCAOB on rulemaking docket Number 37, Concept release on auditor independence and audit firm rotation. (August 26), http://pcaobus.org/Rules/Rulemaking/Docket037/012_Kimball.pdf
   Google Scholar
• Trompeter, G. (1994). The effect of partner compensation schemes and generally accepted accounting principles on audit partner judgment. Auditing: A Journal of Practice & Theory, 13(2), 56–68.
   Web of Science ®Google Scholar
• Tucker, R. R., & Matsumura, E. M. (1997). Second-partner review: An experimental economics investigation. Auditing: A Journal of Practice & Theory, 16(1), 79–98.
   Web of Science ®Google Scholar
• Turner, C. W. (2001). Accountability demands and the auditor’s evidence search strategy: The influence of reviewer preferences and the nature of the response (belief vs. Action). Journal of Accounting Research, 39(3), 683–706. https://doi.org/10.1111/1475-679X.00034
   Web of Science ®Google Scholar
• Van Dyne, L., & Pierce, J. L. (2004). Psychological ownership and feelings of possession: Three field studies predicting employee attitudes and organizational citizenship behaviour. Journal of Organizational Behaviour, 25(4), 439–459. https://doi.org/10.1002/job.249
   Web of Science ®Google Scholar
• Wang, K. J., & Tuttle, B. M. (2009). The impact of auditor rotation on auditor–client negotiation. Accounting, Organizations and Society, 34(2), 222–243. https://doi.org/10.1016/j.aos.2008.06.003
   Web of Science ®Google Scholar
• Wilks, T. J. (2002). Pre-decisional distortion of evidence as a consequence of real-time audit review. The Accounting Review, 77(1), 51–71. https://doi.org/10.2308/accr.2002.77.1.51
   Web of Science ®Google Scholar