The effect of auditor tenure on the disclosure of restatements and material internal control weaknesses

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dc.contributor Aalto University en
dc.contributor Aalto-yliopisto fi
dc.contributor.advisor Myllymäki, Emma-Riikka
dc.contributor.author Mäkelä, Markus
dc.date.accessioned 2018-03-28T12:38:58Z
dc.date.available 2018-03-28T12:38:58Z
dc.date.issued 2017
dc.identifier.uri https://aaltodoc.aalto.fi/handle/123456789/30363
dc.description.abstract Objectives of the study This study investigates the association between audit firm tenure and announcement of financial restatements and material internal control weaknesses. These announcements are used as a proxy for auditor’s ability to find problems and misstatements, which is a different approach for studying audit quality compared to the most of the previous studies of audit quality. Motivation behind this study is the recent adoption of mandatory audit firm rotation in EU, and on other the other hand the majority of previous studies suggesting that audit quality improves with the tenure of audit firm. Also the reluctance of US firms to adopt mandatory audit firm rotation in the United States motivates this study. Data and methodology The main sample of this study consists of 8541 firm-year observations from years 2004-2016. The sample data has been compiled from Audit Analytics and Compustat databases and has been analysed with two logistic regression models to find out possible associations between audit firm tenure and financial restatements or material internal control weakness disclosures. Results The results from both of the regression models show that there is a significant positive association between short audit firm tenures and restatement or material internal control weakness disclosures. Specifically, auditor tenure of 0-1 years seems to be associated with financial restatement announcements and tenures 0-5 years with material internal control weakness disclosures. Also in the material internal control weakness model the tenure of 0-1 years has the highest regression coefficient indicating that problems are most likely to be disclosed right after audit firm change. en
dc.format.extent 61
dc.language.iso en en
dc.title The effect of auditor tenure on the disclosure of restatements and material internal control weaknesses en
dc.type G2 Pro gradu, diplomityö fi
dc.contributor.school Kauppakorkeakoulu fi
dc.contributor.school School of Business en
dc.contributor.department Laskentatoimen laitos fi
dc.subject.keyword auditor tenure en
dc.subject.keyword restatements en
dc.subject.keyword audit quality en
dc.subject.keyword internal control quality en
dc.identifier.urn URN:NBN:fi:aalto-201803281830
dc.type.ontasot Master's thesis en
dc.type.ontasot Maisterin opinnäyte fi
dc.programme Accounting en
dc.subject.helecon laskentatoimi fi
dc.subject.helecon tilintarkastus fi
dc.subject.helecon tilinpäätös fi
dc.subject.helecon työ fi
dc.subject.helecon laatu fi
dc.subject.helecon valvonta fi
dc.ethesisid 17053
dc.location P1 I fi


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