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dc.contributor.authorLi, Danen_US
dc.date.accessioned2007-08-16T17:41:53Z
dc.date.available2007-08-16T17:41:53Z
dc.date.issued2007-06-29en_US
dc.identifier.urihttp://hdl.handle.net/1853/16155
dc.description.abstractAccounting regulators are concerned about the potential threat of long-term auditor-client relationships on auditor independence, leading to lower audit quality. The main objective of this study is to examine the association between auditor tenure and an important feature of accounting, namely conservatism. Following Basu (1997) and Ball, Kothari and Robin (2000), I define conservatism as the quicker recognition in earnings of bad news about expected future cash flows. I investigate whether long-term auditor-client relationships are associated with less timely recognition of earnings to bad news, and a lower rate of reversal of negative earnings changes. The overall results strongly show that conservatism decreases as auditor tenure lengthens. The results are robust across various measures of conservatism and a series of sensitivity tests. However, auditors¡¯ litigation exposure appears to be able to mitigate the adverse impact of auditor tenure. In additional tests, I find that the reduced conservatism is not driven by the larger clients that auditors have incentives to retain. Moreover, I find that even industry specialists could not avoid the negative impact of longer auditor-client relationships on conservatism. The study provides some support to the regulators who are concerned about the potential negative impact of auditor tenure on audit quality and the rule of mandatory audit firm rotation.en_US
dc.publisherGeorgia Institute of Technologyen_US
dc.subjectConditional conservatismen_US
dc.subjectAuditor independenceen_US
dc.subjectEarnings timelinessen_US
dc.subjectAuditor tenureen_US
dc.titleAuditor tenure and accounting conservatismen_US
dc.typeDissertationen_US
dc.description.degreePh.D.en_US
dc.contributor.departmentManagementen_US
dc.description.advisorCommittee Chair: Schneider, Arnold; Committee Member: Basu, Sudipta; Committee Member: Church, Bryan; Committee Member: Comiskey, Eugene; Committee Member: Mulford, Charlesen_US


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