Affiliation:
1. Shanghai University of Finance and Economics
2. Massachusetts Institute of Technology
3. Central University of Finance and Economics
4. Cornell University
Abstract
ABSTRACT
We find that economic conditions at the time an auditor enters the labor market have a long-term impact on her judgment and decision making. Specifically, engagement partners who started their career during economic downturns issue audit adjustments more frequently. For the subsample of company-years with no audit adjustments, downturn auditors are more likely to issue a modified audit opinion. In addition, companies audited by downturn auditors are less likely to violate financial reporting and disclosure regulations. Together, our findings suggest that the early career stage is a critical formative period for auditors.
JEL Classifications: J24; M42.
Publisher
American Accounting Association
Subject
Economics and Econometrics,Finance,Accounting
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