Does Mandatory Audit Partner Rotation Influence Auditor Selection Strategies?
Abstract
:1. Introduction
2. Institutional Background, Literature Review, and Hypotheses
2.1. Institutional Background
2.2. Literature Review and Hypotheses Development
2.2.1. Auditor Selection Strategies
2.2.2. Selection of Industry Specialist Auditors
2.2.3. Rotated Levels
3. Research Design
3.1. Empirical Model
- SUCCESSOR = successor auditor choice of sample companies, which denotes 1 for the company that choose an industry specialist audit partner to be its successor auditor and 0 otherwise for Hypotheses 1; and 1 for companies that rotate audit firms around the rotation period, and 0 otherwise for Hypothesis 2;
- MANROT = an indicating variable of mandatory rotation, which denotes 1 if the company is mandated to rotate its audit partner this year, and 0 otherwise;
- SIZE = log10 of total assets;
- LEVERAGE = the amount of long-term debts divided by total assets;
- LOSS = dummy variable that equals 1 if net income <0 for company i in industry k for year t, and 0 otherwise;
- CFO = net cash flows from operations scaled by the beginning book value of total assets;
- GROWTH = the growth rate of net sales over the previous year;
- ABSTACC = absolute value of total accruals scaled by total assets;
- INST = percentage of stock owned by institutional investors;
- BIGN = a dummy variable equal to1 if the company is audited by a Big n audit firm, and 0 otherwise;
- BOARD = the board size, measured by the number of board of directors and supervisors;
- BHOLD = the board share-holdings ratio, measured by the percentage of director and supervisor stockholdings;
- BPLEDGE = ratio of shares pledged, measured by the percentage of shares pledged by board members;
- BIND = the number of independent directors and supervisors;
- BCONTROL = the number of controlled directors and supervisors.
3.2. Measures of Industry Specialization
3.2.1. Industry Specialist Audit Partner
3.2.2. Industry Specialists Audit Firm
3.3. Sample Selection
4. Empirical Results
4.1. Descriptive Statistics
4.2. Mandatory Auditor Rotation and Successor Audit Partner Choice
4.3. Sub-Sample Regression Results
4.4. Additional Tests
4.4.1. Type of Predecessor Auditors
4.4.2. Audit Firm Tenue
4.4.3. Different Rotation Period
5. Conclusions and Discussions
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Conflicts of Interest
References
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Panel A: Sample Selection | ||||||
Total companies on TWSE from 2004–2016 | 20,052 | |||||
Less: Companies without required financial data | (204) | |||||
Less: Companies without required other data | (303) | |||||
Sample companies with sufficient data | 19,545 | |||||
Less: Companies did not rotate audit partners | (11,756) | |||||
Total Companies of audit partner rotation data from 2004–2016 | 7789 | |||||
Panel B: Distribution of audit partners’ rotations | ||||||
Mandatory Rotation | % | Voluntary Rotation | % | Total | % | |
Companies | 1372 | 17.61 | 6417 | 82.39 | 7789 | 100.000 |
Rotated from | ||||||
Specialist | 105 | 7.653 | 499 | 7.745 | 604 | 7.755 |
Non-specialist | 1267 | 92.345 | 5920 | 92.255 | 7185 | 92.245 |
1372 | 100.000 | 6417 | 100.000 | 7789 | 100.000 | |
Switch to | ||||||
Specialist | 113 | 8.236 | 517 | 8.057 | 630 | 8.088 |
Non-specialist | 1259 | 91.764 | 5900 | 91.943 | 7159 | 91.912 |
1372 | 100.000 | 6417 | 100.000 | 7789 | 100.000 |
N | Min. | 25% | Median | Mean | 75% | Max. | Std. Dev | |
---|---|---|---|---|---|---|---|---|
SUCSPE_F | 7789 | 0.000 | 0.000 | 0.000 | 0.017 | 0.000 | 1.000 | 0.130 |
SUCSPE_P | 7789 | 0.000 | 0.000 | 0.000 | 0.081 | 0.000 | 1.000 | 0.273 |
MANROT | 7789 | 0.000 | 0.000 | 0.000 | 0.176 | 0.000 | 1.000 | 0.381 |
SIZE | 7789 | 4.379 | 6.174 | 6.535 | 6.644 | 6.985 | 9.879 | 0.691 |
LEVERAGE | 7789 | 0.000 | 0.000 | 0.030 | 0.073 | 0.118 | 0.889 | 0.098 |
LOSS | 7789 | 0.000 | 0.000 | 0.000 | 0.215 | 0.000 | 1.000 | 0.411 |
CFO | 7789 | −5.451 | 0.067 | 0.065 | 0.132 | 1.750 | 0.173 | |
GROWTH | 7789 | −68.739 | 4.951 | 9.636 | 19.454 | 232.877 | 37.579 | |
ABSTACC | 7789 | 0.000 | 0.165 | 0.196 | 0.269 | 7.640 | 0.185 | |
INST | 7789 | 0.000 | 34.320 | 37.395 | 53.950 | 100.000 | 22.844 | |
BIGN | 7789 | 0.000 | 1.000 | 0.852 | 1.000 | 1.000 | 0.355 | |
BOARD | 7789 | 1.000 | 9.000 | 9.508 | 10.000 | 32.000 | 2.494 | |
BHOLD | 7789 | 0.000 | 20.860 | 24.277 | 31.460 | 99.710 | 14.871 | |
BPLEDGE | 7789 | 0.000 | 0.000 | 8.035 | 7.165 | 99.970 | 16.916 | |
BIND | 7789 | 0.000 | 2.000 | 1.497 | 3.000 | 6.000 | 1.368 | |
BCONTROL | 7789 | 0.000 | 3.000 | 4.000 | 4.977 | 6.000 | 25.000 | 2.570 |
(1) | (2) | (3) | (4) | (5) | (6) | (7) | (8) | (9) | (10) | (11) | (12) | (13) | (14) | (15) | (16) | |
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(1)SUCSPE_F | 1.000 | 0.048 *** | −0.022 | −0.024 ** | 0.012 | 0.023 ** | −0.052 *** | 0.007 | −0.006 | 0.039 *** | 0.055 *** | 0.010 | 0.033 *** | −0.003 | 0.015 | −0.013 |
(0.000) | (0.057) | (0.034) | (0.308) | (0.047) | (0.000) | (0.520) | (0.616) | (0.001) | (0.000) | (0.373) | (0.003) | (0.765) | (0.181) | (0.262) | ||
(2)SUCSPE_P | 0.048 *** | 1.000 | −0.003 | 0.292 *** | 0.064 *** | −0.058 *** | 0.039 *** | 0.046 *** | −0.011 | 0.182 *** | 0.084 *** | 0.098 *** | 0.012 | 0.041 *** | −0.024 *** | 0.182 *** |
(0.000) | (0.812) | (0.000) | (0.000) | (0.000) | (0.001) | (0.000) | (0.330) | (0.000) | (0.000) | (0.000) | (0.295) | (0.000) | (0.033) | (0.000) | ||
(3)MANROT | 0.022 * | 0.812 *** | 1.000 | 0.006 | −0.035 *** | −0.033 *** | 0.025 *** | −0.049 *** | −0.009 | 0.006 | 0.061 *** | −0.015 | −0.015 | −0.056 *** | 0.128 *** | −0.097 *** |
(0.057) | (0.003) | (0.617) | (0.002) | (0.004) | (0.030) | (0.000) | (0.425) | (0.572) | (0.000) | (0.172) | (0.196) | (0.000) | (0.000) | (0.000) | ||
(4)SIZE | −0.029 | 0.228 *** | −0.004 | 1.000 | 0.202 *** | −0.179 *** | 0.063 *** | 0.040 *** | −0.113 | 0.421 *** | 0.114 *** | 0.327 *** | −0.145 *** | 0.215 *** | −0.066 *** | 0.444 *** |
(0.009) | (0.000) | (0.706) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | ||
(5)LEVERAGE | −0.002 | 0.072 *** | −0.048 *** | 0.278 *** | 1.000 | 0.102 *** | −0.056 *** | 0.042 *** | −0.122 *** | 0.072 *** | −0.012 | 0.013 | 0.002 | 0.100 *** | −0.047 *** | 0.077 *** |
(0.846) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | (0.276) | (0.262) | (0.876) | (0.000) | (0.000) | (0.000) | ||
(6)LOSS | 0.023 ** | −0.058 *** | −0.033 *** | −0.195 *** | 0.078 *** | 1.000 | −0.217 *** | −0.216 *** | −0.154 *** | −0.162 *** | −0.088 *** | −0.083 *** | −0.071 *** | 0.061 *** | −0.065 *** | −0.052 *** |
(0.047) | (0.000) | (0.004) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | ||
(7)CFO | −0.030 *** | 0.057 *** | 0.027 ** | 0.054 *** | −0.091 *** | −0.351 *** | 1.000 | 0.011 *** | −0.200 *** | 0.078 *** | 0.091 *** | 0.041 *** | 0.034 *** | −0.031 *** | 0.067 *** | −0.001 |
(0.008) | (0.000) | (0.016) | (0.000) | (0.000) | (0.000) | (0.321) | (0.000) | (0.000) | (0.000) | (0.000) | (0.003) | (0.006) | (0.000) | (0.907) | ||
(8)GROWTH | −0.002 | 0.057 *** | −0.069 *** | 0.089 *** | 0.080 *** | −0.303 *** | 0.133 *** | 1.000 | 0.251 *** | 0.069 *** | 0.005 | 0.007 | 0.046 *** | −0.028 ** | 0.018 | −0.004 |
(0.886) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | (0.683) | (0.526) | (0.000) | (0.015) | (0.106) | (0.708) | ||
(9)ABSTACC | −0.014 | −0.028 ** | 0.001 | −0.126 *** | −0.061 *** | −0.190 *** | 0.092 *** | 0.248 *** | 1.000 | −0.091 *** | 0.046 *** | −0.062 *** | 0.011 | −0.091 *** | 0.139 *** | −0.144 *** |
(0.218) | (0.012) | (0.953) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | (0.347) | (0.000) | (0.000) | (0.000) | ||
(10)INST | 0.041 *** | 0.173 *** | 0.006 | 0.387 *** | 0.047 *** | −0.162 *** | 0.128 *** | 0.078 *** | −0.151 *** | 1.000 | 0.130 | 0.182 *** | 0.408 *** | 0.039 *** | 0.056 *** | 0.261 *** |
(0.000) | (0.000) | (0.597) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | (0.001) | (0.000) | (0.000) | ||
(11)BIGN | 0.055 *** | 0.084 *** | 0.061 *** | 0.091 *** | −0.018 | −0.088 *** | 0.124 *** | 0.048 *** | 0.065 *** | 0.131 *** | 1.000 | 0.036 *** | 0.024 *** | −0.031 *** | 0.129 *** | −0.021 |
(0.000) | (0.000) | (0.000) | (0.000) | (0.105) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | (0.001) | (0.032) | (0.006) | (0.000) | (0.058) | ||
(12)BOARD | 0.006 | 0.065 *** | 0.004 | 0.213 *** | 0.036 *** | −0.083 *** | 0.083 *** | 0.052 *** | −0.018 | 0.149 *** | 0.043 *** | 1.000 | 0.065 *** | 0.028 ** | 0.108 *** | 0.579 *** |
(0.580) | (0.000) | (0.742) | (0.000) | (0.001) | (0.000) | (0.000) | (0.000) | (0.117) | (0.000) | (0.000) | (0.000) | (0.012) | (0.000) | (0.000) | ||
(13)BHOLD | 0.028 ** | −0.007 | −0.014 | −0.212 *** | −0.065 *** | −0.071 *** | 0.065 *** | 0.039 *** | 0.002 | 0.307 *** | 0.020 * | 0.053 *** | 1.000 | −0.124 *** | 0.037 *** | 0.108 *** |
(0.015) | (0.553) | (0.220) | (0.000) | (0.000) | (0.000) | (0.000) | (0.001) | (0.879) | (0.000) | (0.078) | (0.000) | (0.000) | (0.001) | (0.000) | ||
(14)BPLEDGE | −0.011 | 0.076 *** | −0.050 *** | 0.300 *** | 0.172 *** | 0.013 | −0.054 *** | −0.002 | −0.108 *** | 0.057 *** | −0.024 ** | 0.090 *** | −0.157 *** | 1.000 | −0.130 *** | 0.125 *** |
(0.339) | (0.000) | (0.000) | (0.000) | (0.000) | (0.239) | (0.000) | (0.871) | (0.000) | (0.000) | (0.033) | (0.000) | (0.000) | (0.000) | (0.000) | ||
(15)BIND | 0.014 | −0.023 *** | 0.130 *** | −0.119 *** | −0.052 *** | −0.069 *** | 0.124 *** | 0.042 *** | 0.165 *** | 0.056 *** | 0.130 *** | 0.189 *** | 0.035 *** | −0.166 *** | 1.000 | −0.324 *** |
(0.220) | (0.045) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | (0.002) | (0.000) | (0.00) | ||
(16)BCONTROL | −0.018 | 0.144 *** | −0.112 *** | 0.397 *** | 0.097 *** | −0.043 *** | −0.027 *** | 0.015 | −0.196 *** | 0.243 *** | −0.039 *** | 0.357 *** | 0.099 *** | 0.161 *** | −0.342 *** | 1.000 |
(0.116) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | (0.017) | (0.183) | (0.000) | (0.000) | (0.001) | (0.000) | (0.000) | (0.000) | (0.000) |
Panel A | Panel B | Panel C | ||||
---|---|---|---|---|---|---|
SUCSPE | SUCSPE | CHANGEFIRM | ||||
Coeff. | Wald | Coeff. | Wald | Coeff. | Wald | |
MROT1 | 0.322 ** | 5.634 | −0.773 *** | 25.634 | ||
MROT2 | 0.727 ** | 5.630 | ||||
SIZE | 1.497 *** | 248.255 | 1.499 *** | 248.576 | −0.900 *** | 79.190 |
LEVERAGE | −0.264 | 0.267 | −0.276 | 0.292 | 0.848 * | 3.483 |
LOSS | 0.033 | 0.054 | 0.022 | 0.026 | 0.508 *** | 21.951 |
CFO | 0.557 * | 2.988 | 0.548 * | 2.899 | −1.277 *** | 27.847 |
GROWTH | 0.003 ** | 5.331 | 0.003 ** | 5.328 | 0.001 | 1.460 |
ABSTACC | 0.671 ** | 6.597 | 0.666 ** | 6.523 | −0.681 *** | 7.962 |
INST | 0.007 *** | 7.223 | 0.007 *** | 6.703 | 0.009 *** | 10.878 |
BIGN | 1.119 *** | 29.550 | 1.116 *** | 29.568 | −1.022 *** | 96.184 |
BOARD | −0.046 * | 3.302 | −0.046 * | 3.414 | 0.010 | 0.161 |
BHOLD | 0.006 * | 3.035 | 0.006 * | 3.019 | 0.003 | 0.887 |
BPLEDGE | 0.000 | 0.025 | −0.001 | 0.053 | 0.007 *** | 7.618 |
BIND | −0.001 | 0.001 | 0.002 | 0.003 | −0.056 | 1.772 |
BCONTROL | 0.058 ** | 4.495 | 0.059 ** | 4.669 | −0.009 | 0.104 |
Intercept | −14.644 *** | 409.759 | −14.558 *** | 409.698 | 3.816 *** | 31.571 |
Industry | Included | Included | Included | |||
Year | Included | Included | Included | |||
N | 7789 | 7789 | 7789 | |||
Cox & Snell R2 | 0.107 | 0.107 | 0.065 | |||
Nagelkerke R2 | 0.248 | 0.248 | 0.155 | |||
Sig. | 0.000 *** | 0.000 *** | 0.000 *** |
Panel A Rotate Only One Partner | Panel B Rotate Both Partners | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
One Partner Rotated Mandatorily | Mandatory Rotate Both Partners | |||||||||||
(1) SUCSPE | (2) CHANGEFIRM | (3) SUCSPE | (4) CHANGEFIRM | (5) SUCSPE | (6) CHANGEFIRM | |||||||
Coeff. | Wald | Coeff. | Wald | Coeff. | Wald | Coeff. | Wald | Coeff. | Wald | Coeff. | Wald | |
MROT1 | 0.893 *** | 8.800 | −1.310 * | 3.001 | 0.541 ** | 4.084 | −1.240 *** | 47.850 | ||||
MROT2 | 0.118 * | 0.093 | −1.783 *** | 31.479 | ||||||||
SIZE | 0.177 | 1.210 | −0.227 | 0.379 | 1.339 *** | 44.660 | −0.890 *** | 43.615 | 1.318 *** | 43.725 | −0.914 *** | 46.218 |
LEVERAGE | 0.588 | 0.530 | −0.586 | 0.111 | 0.551 | 0.298 | 0.944 | 2.452 | 0.580 | 0.336 | 1.034 * | 2.952 |
LOSS | −0.478 ** | 4.778 | 0.118 | 0.063 | 0.531 ** | 4.543 | 0.345 ** | 5.716 | 0.498 ** | 4.040 | 0.375 *** | 6.837 |
CFO | 0.066 | 0.011 | 0.910 | 0.687 | 0.107 | 0.048 | −1.295 *** | 10.852 | 0.125 | 0.067 | −1.319 *** | 11.559 |
GROWTH | −0.001 | 0.158 | −0.008 | 1.561 | 0.002 | 0.785 | 0.001 | 0.415 | 0.002 | 0.633 | 0.001 | 0.699 |
ABSTACC | −0.232 | 0.189 | −1.539 | 0.920 | 1.105 * | 3.150 | −0.197 | 0.222 | 1.065 * | 2.967 | −0.129 | 0.095 |
INST | −0.011 ** | 6.428 | 0.005 | 0.204 | 0.014 ** | 6.073 | 0.008 ** | 5.233 | 0.014 ** | 6.112 | 0.009 ** | 6.193 |
BIGN | −0.004 | 0.000 | −2.785 *** | 49.627 | 1.372 *** | 13.043 | −0.600 *** | 16.535 | 1.347 *** | 12.680 | −0.629 *** | 18.427 |
BOARD | −0.023 | 0.307 | −0.184 * | 2.761 | −0.019 | 0.130 | 0.062 * | 3.651 | −0.013 | 0.058 | 0.059 * | 3.263 |
BHOLD | 0.004 | 0.442 | 0.014 | 1.080 | 0.001 | 0.012 | 0.002 | 0.172 | 0.001 | 0.033 | 0.002 | 0.209 |
BPLEDGE | 0.008 ** | 4.524 | −0.003 | 0.083 | 0.000 | 0.000 | 0.006 * | 3.442 | 0.000 | 0.001 | 0.007 ** | 4.449 |
BIND | −0.055 | 0.694 | 0.034 | 0.047 | −0.179 ** | 4.697 | −0.026 | 0.249 | −0.176 ** | 4.550 | −0.043 | 0.655 |
BCONTROL | −0.026 | 0.325 | 0.144 | 1.855 | 0.011 | 0.038 | −0.013 | 0.118 | 0.002 | 0.001 | −0.002 | 0.003 |
Intercept | −3.455 *** | 9.787 | −17.934 | 0.000 | −13.345 *** | 81.103 | 5.431 *** | 36.709 | −12.993 *** | 78.818 | 5.303 *** | 35.701 |
Industry | Included | Included | Included | Included | Included | Included | ||||||
Year | Included | Included | Included | Included | Included | Included | ||||||
N | 6139 | 6139 | 1650 | 1650 | 1650 | 1650 | ||||||
Cox & Snell R2 | 0.011 | 0.025 | 0.120 | 0.204 | 0.118 | 0.199 | ||||||
Nagelkerke R2 | 0.044 | 0.335 | 0.269 | 0.283 | 0.265 | 0.275 | ||||||
Sig. | 0.013 ** | 0.000 *** | 0.000 *** | 0.000 *** | 0.000 *** | 0.000 *** |
Panel A Rotate Only One Partner | Panel B Rotate Both Partners | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
(1) LEAD | (2) CONCURRING | (3) LEAD | (4) CONCURRING | (5) BOTHMROT | ||||||
Coeff. | Wald | Coeff. | Wald | Coeff. | Wald | Coeff. | Wald | Coeff. | Wald | |
MANROT | 1.655 *** | 34.640 | 0.682 ** | 5.241 | 0.503 * | 2.718 | 0.007 | 0.000 | 0.118 | 0.093 |
SIZE | 1.619 *** | 62.575 | 1.501 *** | 70.671 | 0.948 *** | 25.508 | 0.962 *** | 24.504 | 1.318 *** | 43.725 |
LEVERAGE | −1.583 | 1.726 | −1.848 * | 2.942 | 0.571 | 0.358 | 0.690 | 0.478 | 0.580 | 0.336 |
LOSS | 0.177 | 0.281 | 0.101 | 0.121 | 0.171 | 0.381 | 0.100 | 0.116 | 0.498 ** | 4.040 |
CFO | 0.641 | 0.631 | 1.327 | 2.306 | 0.251 | 0.185 | 0.282 | 0.223 | 0.125 | 0.067 |
GROWTH | 0.006 ** | 4.757 | 0.002 | 0.340 | 0.003 | 2.238 | 0.003 | 1.186 | 0.002 | 0.633 |
ABSTACC | 0.670 | 1.078 | −0.250 | 0.106 | 0.083 | 0.016 | 1.106 * | 3.276 | 1.065 * | 2.967 |
INST | 0.001 | 0.059 | 0.009 | 2.549 | 0.014 ** | 5.152 | 0.011 * | 2.985 | 0.014 ** | 6.112 |
BIGN | 0.370 | 0.857 | 3.156 *** | 9.436 | 1.031 *** | 6.807 | 1.327 *** | 7.730 | 1.347 *** | 12.680 |
BOARD | −0.039 | 0.478 | −0.067 | 1.888 | −0.090 | 2.456 | 0.000 | 0.000 | −0.013 | 0.058 |
BHOLD | 0.002 | 0.071 | 0.005 | 0.528 | −0.002 | 0.039 | −0.003 | 0.151 | 0.001 | 0.033 |
BPLEDGE | −0.008 | 1.590 | 0.000 | 0.006 | −0.010 | 2.531 | 0.001 | 0.010 | 0.000 | 0.001 |
BIND | −0.022 | 0.054 | 0.102 | 1.672 | −0.149 * | 2.757 | −0.071 | 0.619 | −0.176 ** | 4.550 |
BCONTROL | 0.019 | 0.094 | 0.124 ** | 5.180 | 0.100 | 2.569 | 0.059 | 0.904 | 0.002 | 0.001 |
Intercept | −15.71 *** | 97.917 | −17.69 *** | 112.99 | −10.41 *** | 64.269 | −11.33 *** | 71.351 | −12.99 *** | 78.818 |
Industry | Included | Included | Included | Included | Included | |||||
Year | Included | Included | Included | Included | Included | |||||
N | 6139 | 6139 | 1650 | 1650 | 1650 | |||||
Cox & Snell R2 | 0.052 | 0.084 | 0.078 | 0.077 | 0.118 | |||||
Nagelkerke R2 | 0.226 | 0.287 | 0.203 | 0.208 | 0.265 | |||||
Sig. | 0.000 *** | 0.000 *** | 0.000 *** | 0.000 *** | 0.000 *** |
Panel A Full Sample | Panel B Lead Auditors | Panel C Concurring Auditors | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
(1) PRE SPE | (2) PRE NON-SPE | (3) PRE SPE | (4) PRE NON-SPE | (5) PRE SPE | (6) PRE NON-SPE | |||||||
Coeff. | Wald | Coeff. | Wald | Coeff. | Wald | Coeff. | Wald | Coeff. | Wald | Coeff. | Wald | |
MANROT | 0.334 * | 3.174 | 0.237 | 0.827 | 0.735 *** | 7.332 | 1.001 *** | 16.382 | 0.732 ** | 5.916 | −0.081 | 0.053 |
SIZE | 1.272 *** | 102.746 | 1.051 *** | 29.119 | 0.848 *** | 21.838 | 1.151 *** | 40.135 | 1.433 *** | 77.183 | 0.928 *** | 27.402 |
LEVERAGE | −0.472 | 0.389 | 0.331 | 0.130 | −0.575 | 0.255 | 0.717 | 0.677 | −1.337 | 1.671 | −0.470 | 0.240 |
LOSS | −0.110 | 0.328 | 0.021 | 0.007 | 0.078 | 0.064 | −0.100 | 0.149 | −0.322 | 1.409 | −0.027 | 0.011 |
CFO | 0.419 | 0.948 | 0.456 | 0.649 | −0.353 | 0.247 | 0.559 | 1.041 | 0.375 | 0.415 | 0.181 | 0.076 |
GROWTH | 0.001 | 0.103 | 0.007 *** | 11.922 | 0.002 | 0.573 | 0.006 *** | 8.842 | 0.002 | 0.501 | 0.002 | 0.479 |
ABSTACC | 0.493 | 1.384 | 0.297 | 0.381 | 0.659 | 1.496 | 0.447 | 0.818 | 0.473 | 0.830 | −0.081 | 0.018 |
INST | 0.007 * | 3.618 | 0.000 | 0.001 | 0.000 | 0.006 | 0.004 | 0.570 | 0.002 | 0.148 | 0.010 ** | 4.023 |
BIGN | 0.567 * | 2.867 | 0.730 ** | 5.379 | −0.588 | 1.845 | 0.602 * | 3.746 | 0.413 | 0.741 | 1.074 *** | 8.078 |
BOARD | −0.064 * | 3.097 | −0.054 | 1.197 | −0.109 * | 3.599 | −0.010 | 0.046 | −0.035 | 0.561 | −0.036 | 0.565 |
BHOLD | −0.003 | 0.498 | 0.012 * | 3.164 | −0.004 | 0.362 | 0.016 ** | 6.368 | −0.003 | 0.213 | 0.006 | 1.052 |
BPLEDGE | 0.003 | 0.497 | −0.005 | 0.706 | 0.005 | 0.795 | −0.001 | 0.043 | 0.000 | 0.009 | 0.002 | 0.129 |
BIND | −0.061 | 1.174 | −0.059 | 0.581 | −0.019 | 0.056 | −0.151 ** | 4.024 | −0.004 | 0.004 | −0.020 | 0.076 |
BCONTROL | 0.122 *** | 9.316 | 0.002 | 0.001 | 0.113 * | 3.812 | −0.029 | 0.331 | 0.123 ** | 5.471 | 0.026 | 0.269 |
Intercept | −11.62 *** | 130.501 | −10.86 *** | 63.019 | −6.429 *** | 19.691 | −13.06 *** | 94.505 | −12.93 *** | 89.65 | −11.67 *** | 78.622 |
Industry | Included | Included | Included | Included | Included | Included | ||||||
Year | Included | Included | Included | Included | Included | Included | ||||||
N | 604 | 7185 | ||||||||||
Cox & Snell R2 | 0.272 | 0.020 | 0.180 | 0.023 | 0.250 | 0.021 | ||||||
Nagelkerke R2 | 0.389 | 0.099 | 0.252 | 0.124 | 0.408 | 0.106 | ||||||
Sig. | 0.000 *** | 0.000 *** | 0.000 *** | 0.000 *** | 0.000 *** | 0.000 *** |
Panel A Firm Tenure More than 5 Years | Panel B Firm Tenure Less than 5 Years | |||
---|---|---|---|---|
Coeff. | Wald | Coeff. | Wald | |
MANROT | −0.572 *** | 11.247 | −0.638 | 0.379 |
SIZE | −0.153 | 1.696 | 1.772 | 1.989 |
LEVERAGE | 0.157 | 0.090 | −8.030 | 2.017 |
LOSS | 0.539 *** | 16.553 | 0.497 | 0.232 |
CFO | −1.338 *** | 17.826 | −0.336 | 0.004 |
GROWTH | 0.000 | 0.000 | −0.073 ** | 3.957 |
ABSTACC | −0.551 * | 3.001 | 4.005 | 0.394 |
INST | 0.000 | 0.002 | 0.002 | 0.003 |
BIGN | −0.870 *** | 41.131 | −18.710 | 0.002 |
BOARD | −0.008 | 0.082 | −0.236 | 1.011 |
BHOLD | 0.000 | 0.003 | 0.013 | 0.128 |
BPLEDGE | 0.008 ** | 6.203 | −0.010 | 0.256 |
BIND | −0.295 *** | 37.696 | 0.159 | 0.129 |
BCONTROL | 0.078 ** | 5.616 | 0.525 * | 3.315 |
Intercept | −9.115 *** | 49.437 | −18.704 *** | 348.776 |
Industry | Included | Included | ||
Year | Included | Included | ||
N | 2765 | 5024 | ||
Cox & Snell R2 | 0.182 | 0.031 | ||
Nagelkerke R2 | 0.284 | 0.734 | ||
Sig. | 0.000 *** | 0.000 *** |
Panel A 5-Year Mandatory Rotations Period | Panel B 7-Year Mandatory Rotation Period | |||||||
---|---|---|---|---|---|---|---|---|
(1) SUCSPE | (2) CHANGEFIRM | (3) SUCSPE | (4) CHANGEFIRM | |||||
Coeff. | Wald | Coeff. | Wald | Coeff. | Wald | Coeff. | Wald | |
MANROT | 1.106 *** | 7.542 | −0.395 | 1.987 | 0.243 | 2.131 | −0.883 *** | 23.496 |
SIZE | 1.530 *** | 121.680 | −0.735 *** | 21.227 | 1.630 *** | 135.169 | −1.009 *** | 56.501 |
LEVERAGE | −0.591 | 0.632 | 1.057 | 2.118 | 0.150 | 0.042 | 0.838 | 1.991 |
LOSS | −0.013 | 0.005 | 0.720 *** | 17.162 | 0.106 | 0.263 | 0.362 ** | 6.536 |
CFO | 0.090 | 0.045 | −1.464 *** | 12.880 | 1.041 * | 3.076 | −1.103 *** | 12.428 |
GROWTH | 0.003 | 2.555 | 0.002 | 0.853 | 0.004 * | 3.477 | 0.001 | 0.653 |
ABSTACC | 0.978 ** | 6.070 | −1.295 ** | 4.821 | 0.598 | 1.569 | −0.502 * | 3.200 |
INST | 0.010 *** | 7.301 | 0.011 ** | 6.230 | 0.003 | 0.495 | 0.007 ** | 4.419 |
BIGN | 1.622 *** | 26.017 | −0.991 *** | 34.062 | 0.621 ** | 5.080 | −1.047 *** | 60.122 |
BOARD | −0.035 | 0.973 | 0.042 | 1.300 | −0.036 | 0.963 | −0.030 | 0.697 |
BHOLD | 0.008 | 2.584 | 0.001 | 0.032 | 0.006 | 1.495 | 0.005 | 1.344 |
BPLEDGE | 0.002 | 0.503 | 0.004 | 0.781 | −0.006 | 1.571 | 0.009 *** | 8.010 |
BIND | −0.010 | 0.032 | −0.069 | 1.358 | −0.006 | 0.009 | −0.033 | 0.295 |
BCONTROL | 0.026 | 0.454 | −0.039 | 0.862 | 0.067 | 2.612 | 0.013 | 0.121 |
Intercept | −14.77 *** | 205.325 | 2.416 ** | 5.105 | 0.560 | 1.053 | 0.479 | 0.486 |
Industry | Included | Included | Included | Included | ||||
Year | Included | Included | Included | Included | ||||
N | 3556 | 3556 | 4233 | 4233 | ||||
Cox & Snell R2 | 0.121 | 0.056 | 0.099 | 0.079 | ||||
Nagelkerke R2 | 0.263 | 0.147 | 0.248 | 0.177 | ||||
Sig. | 0.000 *** | 0.000 *** | 0.000 *** | 0.000 *** |
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He, L.-J.; Chen, J. Does Mandatory Audit Partner Rotation Influence Auditor Selection Strategies? Sustainability 2021, 13, 2058. https://doi.org/10.3390/su13042058
He L-J, Chen J. Does Mandatory Audit Partner Rotation Influence Auditor Selection Strategies? Sustainability. 2021; 13(4):2058. https://doi.org/10.3390/su13042058
Chicago/Turabian StyleHe, Li-Jen, and Jianxiong Chen. 2021. "Does Mandatory Audit Partner Rotation Influence Auditor Selection Strategies?" Sustainability 13, no. 4: 2058. https://doi.org/10.3390/su13042058