Journal article
Audit Office Labor Market Proximity and Audit Quality
G Lee, V Naiker, CR Stewart
Accounting Review | AMER ACCOUNTING ASSOC | Published : 2022
Abstract
This study examines whether the audit quality of Big 4 audit firms is affected by an audit office's proximity to more target universities for appointing staff auditors. We identify these target universities using a recruitment map of a Big 4 audit firm and unique office-level hiring data hand-collected from LinkedIn. Our findings suggest that audit offices closer to more of their key feeder schools and universities with accredited business schools are associated with higher audit quality, as observed by a lower likelihood of financial accounting misstatements. Our results are robust across alternative measures of labor market proximity and audit quality, and to a battery of sensitivity tests..
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Funding Acknowledgements
We are thankful for the comments from Michael S. Wilkins (editor) , two anonymous reviewers, Margaret Abernethy, Kathleen Bentley-Goode, Steven Cahan, Tom Frick, Neil Fargher, Ronen Gal-Or, Ian Gow, Like Jiang, Petko Kalev, James Kavourakis, Matthew Pinnuck, Roger Simnett, Divesh Sharma, Ken Trotman, Iliyas Yusoff, and participants at the 2019 Center for Chinese Government Auditing Research Conference, 2018 Journal of Contemporary Accounting & Economics Midyear Symposium, 2017 Annual Australian National Centre for Audit and Assurance Research Conference, City University of Hong Kong, Deakin University, Latrobe University, Singapore Management University, Sun Yat Sen University, and The University of Sydney. We are grateful for the financial support of The University of Melbourne.