Does shared tenure between audit committee chair and engagement partner affect audit outcomes? Evidence from the UK

Salem Alhababsah, Alaa Alhaj Ismail

Research output: Contribution to journalArticlepeer-review

5 Citations (Scopus)
51 Downloads (Pure)

Abstract

Social psychology literature suggests that shared working experience between individuals affects the way in which they communicate, interact and exchange information. Given that the relationship between audit committee (AC) and engagement partner (EP) involves extensive interactions and information sharing with the aim to protect the integrity of financial statements, this study examines whether the co-tenure relationship between the person who leads the AC (audit committee chair (ACC)) and EP affects audit outcomes. Using 234 UK non-financial companies, we find that longer co-tenure between ACC and EP improves accruals quality and reduces the propensity to meet or beat the earnings benchmark. Moreover, we do not find a significant relationship between ACC–EP shared tenure and audit fees, alleviating the concern that ACC–EP shared tenure could lead to collusion or inappropriate favoritism towards the EP regarding audit fees. Our findings offer a valuable contribution to the literature, practice, and regulators.
Original languageEnglish
Article number101067
Number of pages28
JournalThe British Accounting Review
Volume55
Issue number2
Early online date8 Nov 2021
DOIs
Publication statusPublished - Mar 2023

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This document is the author’s post-print version, incorporating any revisions agreed during the peer-review process. Some differences between the published version and this version may remain and you are advised to consult the published version if you wish to cite from it.

Keywords

  • Audit committee chair
  • Audit fees
  • Audit quality
  • Engagement partner
  • Shared tenure

ASJC Scopus subject areas

  • Accounting

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