Do Satisfied Auditors Perform Better? Investigating the Association between Audit Firm Employee Job Satisfaction and Audit Quality

A.H. Gold, Yu Flora Kuang, Gladys Lee, Bo Qin

Research output: Chapter in Book / Report / Conference proceedingConference contributionAcademicpeer-review

Abstract

We examine the association between employee job satisfaction in audit firms and audit quality. Using a US-based dataset of auditor self-assessments on their job satisfaction between 2008 and 2017, we find that auditor job satisfaction is positively associated with audit quality measured at both an audit-firm level and a client level. At the audit firm-level, we show that audit firms with higher employee satisfaction have a lower tendency to be involved in a SEC or PCAOB enforcement action. At the client-firm level, audit firms with higher employee satisfaction perform higher quality audits, in that their clients report lower discretionary accruals, experience a lower propensity of financial restatement, and a lower likelihood of misstatement. Further, we find that the positive effects of audit firm employee job satisfaction on audit quality are mainly applicable to non-Big 4 audit firms (vis-à-vis Big 4 firms), and staff-level auditors (vis-à-vis managers, partners and directors).
Original languageEnglish
Title of host publication9th European Auditing Research Network Symposium (EARNet)
Subtitle of host publicationLeuven, Belgium
Publication statusPublished - 30 Sep 2017

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Audit quality
Job satisfaction
Auditors
Audit firms
Employees
Employee satisfaction
Propensity
Enforcement
Discretionary accruals
Self-assessment
Financial restatements
PCAOB
Big 4
Staff
Managers
Quality audit

Keywords

  • Job Satisfaction, Audit Quality, SEC Regulation

Cite this

Gold, A. H., Kuang, Y. F., Lee, G., & Qin, B. (2017). Do Satisfied Auditors Perform Better? Investigating the Association between Audit Firm Employee Job Satisfaction and Audit Quality. In 9th European Auditing Research Network Symposium (EARNet): Leuven, Belgium
Gold, A.H. ; Kuang, Yu Flora ; Lee, Gladys ; Qin, Bo. / Do Satisfied Auditors Perform Better? Investigating the Association between Audit Firm Employee Job Satisfaction and Audit Quality. 9th European Auditing Research Network Symposium (EARNet): Leuven, Belgium. 2017.
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Gold, AH, Kuang, YF, Lee, G & Qin, B 2017, Do Satisfied Auditors Perform Better? Investigating the Association between Audit Firm Employee Job Satisfaction and Audit Quality. in 9th European Auditing Research Network Symposium (EARNet): Leuven, Belgium.

Do Satisfied Auditors Perform Better? Investigating the Association between Audit Firm Employee Job Satisfaction and Audit Quality. / Gold, A.H.; Kuang, Yu Flora; Lee, Gladys; Qin, Bo.

9th European Auditing Research Network Symposium (EARNet): Leuven, Belgium. 2017.

Research output: Chapter in Book / Report / Conference proceedingConference contributionAcademicpeer-review

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AB - We examine the association between employee job satisfaction in audit firms and audit quality. Using a US-based dataset of auditor self-assessments on their job satisfaction between 2008 and 2017, we find that auditor job satisfaction is positively associated with audit quality measured at both an audit-firm level and a client level. At the audit firm-level, we show that audit firms with higher employee satisfaction have a lower tendency to be involved in a SEC or PCAOB enforcement action. At the client-firm level, audit firms with higher employee satisfaction perform higher quality audits, in that their clients report lower discretionary accruals, experience a lower propensity of financial restatement, and a lower likelihood of misstatement. Further, we find that the positive effects of audit firm employee job satisfaction on audit quality are mainly applicable to non-Big 4 audit firms (vis-à-vis Big 4 firms), and staff-level auditors (vis-à-vis managers, partners and directors).

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Gold AH, Kuang YF, Lee G, Qin B. Do Satisfied Auditors Perform Better? Investigating the Association between Audit Firm Employee Job Satisfaction and Audit Quality. In 9th European Auditing Research Network Symposium (EARNet): Leuven, Belgium. 2017