Going big, going small: A perspective on strategies for researching audit quality

Jere R. Francis*

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

Abstract

This paper updates how archival audit research has evolved since the summary in Francis (2004) of what we knew then about audit quality. The paper describes an evolution from "going big" and asking basic questions about the audit market, institutions, and audit quality, to "going small" with a focus on smaller units of analysis (offices, partners, and engagement teams) as the key to understanding audit quality. I used to believe that audit firm differences, and differences across offices within firms, were the most important audit-related sources of variation in quality, and that differences in people and audit teams were relatively unimportant. However, the evidence in Cameran, Campa, and Francis (2022) using UK partner data convinced me otherwise. I now believe the behaviors of partner-led engagement teams are just as important (and maybe more important) than audit firms and offices in understanding audit quality. However, to learn more about partner-led teams means going inside the black box of audit firms, which requires proprietary data from audit firms and research access to their professional staff. I conclude with an example of collaborative research with audit firms.
Original languageEnglish
Article number101167
Number of pages15
JournalBritish Accounting Review
Volume55
Issue number2
DOIs
Publication statusPublished - 1 Mar 2023

Keywords

  • INDUSTRY SPECIALIZATION
  • AGENCY COSTS
  • OFFICE SIZE
  • CASH FLOWS
  • EARNINGS
  • MARKET
  • REPUTATIONS
  • EXPERTISE
  • DECISION
  • PRICES

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