Mandatory Audit Engagement Partner Signature, Audit Quality and Market Perception: Evidence from UK
PublisherThe University of Arizona.
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AbstractU.S. standard setters are considering mandating individual audit engagement partners to sign their name on the audit opinion, in the hope that such a mandate would help investors and improve audit quality. However, it is unclear whether such a mandate would improve audit quality without an increase in audit partner’s legal liability and how the market would react to such a mandate. In this paper, we examine both market perception and audit quality effects of mandatory audit partner signature in the United Kingdom, a country has similar legal and accounting environment as U.S. with no tradition of partner signatures. By comparing multiple measures of audit quality prior and after the adoption of mandatory audit partner signature, we are unable to detect any material change in audit quality. Also, there is no evidence showing that the market reacts positively to the policy change.
Degree ProgramHonors College