This study investigates whether accounting firms match the experience level of individual auditors with the risk level of clients in order to control audit risk. We find that accounting firms tend to assign more exper...This study investigates whether accounting firms match the experience level of individual auditors with the risk level of clients in order to control audit risk. We find that accounting firms tend to assign more experienced auditors to non-state-owned clients that typically have higher tendency to engage in earnings management. Such an assignment pattern is more pronounced for non-Big 4 accounting firms. Further analysis suggests that auditors＇ experience helps reduce clients＇ earnings management level, proxied by abnormal accruals, and thus improves the audit quality. This study enriches the literature on the allocation of human resources and the risk control mechanism in the audit services industry, which has been seldom explored in prior studies.展开更多
基金Ye thanks the National Natural Science Foundation of China for financial support （Grant No, 71072145 and 71132004）. Yuan gratefully acknowledges the financial support from the Humanities and Social Science Research Project of the Ministry of Education of China （Grant No. 11YJC630270）. Cheng thanks the National Natural Science Foundation of China for financial support （Grant No. 71272152）. We appreciate the valuable comments and suggestion of the two anonymous referees, All remaining errors and omissions are our own.
文摘This study investigates whether accounting firms match the experience level of individual auditors with the risk level of clients in order to control audit risk. We find that accounting firms tend to assign more experienced auditors to non-state-owned clients that typically have higher tendency to engage in earnings management. Such an assignment pattern is more pronounced for non-Big 4 accounting firms. Further analysis suggests that auditors＇ experience helps reduce clients＇ earnings management level, proxied by abnormal accruals, and thus improves the audit quality. This study enriches the literature on the allocation of human resources and the risk control mechanism in the audit services industry, which has been seldom explored in prior studies.
