Title:
Auditor tenure and accounting conservatism

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dc.contributor.advisor Schneider, Arnold
dc.contributor.author Li, Dan en_US
dc.contributor.committeeMember Basu, Sudipta
dc.contributor.committeeMember Church, Bryan
dc.contributor.committeeMember Comiskey, Eugene
dc.contributor.committeeMember Mulford, Charles
dc.contributor.department Management en_US
dc.date.accessioned 2007-08-16T17:41:53Z
dc.date.available 2007-08-16T17:41:53Z
dc.date.issued 2007-06-29 en_US
dc.description.abstract Accounting 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.description.degree Ph.D. en_US
dc.identifier.uri http://hdl.handle.net/1853/16155
dc.publisher Georgia Institute of Technology en_US
dc.subject Conditional conservatism en_US
dc.subject Auditor independence en_US
dc.subject Earnings timeliness en_US
dc.subject Auditor tenure en_US
dc.title Auditor tenure and accounting conservatism en_US
dc.type Text
dc.type.genre Dissertation
dspace.entity.type Publication
local.contributor.advisor Schneider, Arnold
local.contributor.corporatename Scheller College of Business
relation.isAdvisorOfPublication 91f92f17-3df5-4259-95e0-451d904a0636
relation.isOrgUnitOfPublication a2f83831-ae41-4d65-82ff-c8bf95db4ffb
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