Theme：Auditor Reputation Concerns, Human Capital Investment, and Audit Quality

Lecturer: Xuejiao Liu , Professor, School of International Business, University of International Business and Economics

Time：2022.06.17 10:00

Site: Tecent meeting 307-234-651

Abstract:

This paper examines audit offices’human capital investment in response to a reputation loss and the resulting effect on audit quality. We document that after client restatement announcements, audit offices attempt to acquire human capital and talent by posting more audit-related job positions. The increase in job postings is concentrated among more senior and experienced positions, and follows restatements with negative market reactions. It is not driven by replacement hiring due to auditor departures and is associated with more auditors joining the office. Audit personnel salaries also increase in response to client restatement announcements. These human capital investments reduce the contagion effect of low-quality audits and the losses in local market share, supporting improvements in audit quality and auditor reputation.

Introduction to the lecturer:

Xuejiao Liu is a professor and doctoral supervisor at the International Business School of the University of International Business and Economics. Her research interests are auditing and financial accounting. Her research results have been published in Review of Accounting Studies (Forthcoming), Contemporary Accounting Research, Journal of Corporate Finance, Journal of Business Finance & Accounting, Journal of Business Ethics, Abacus. She also presided over the general and youth projects of the National Natural Science Foundation of China.