Do joint audits improve or impair audit quality?

• Autores: Mingcherng Deng, Tong Lu, Dan A. Simunic, Minlei Ye
• Localización: Journal of Accounting Research, ISSN-e 1475-679X, Vol. 52, Nº. 5, 2014, págs. 1029-1060
• Idioma: inglés
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• Resumen

  • Conventional wisdom holds that joint audits would improve audit quality by enhancing audit evidence precision because �Two heads are better than one.� Our paper challenges this wisdom. We show that joint audits by one big firm and one small firm may impair audit quality, because, in that situation, joint audits induce a free-riding problem between audit firms and reduce audit evidence precision. We further derive a set of empirically testable predictions comparing audit evidence precision and audit fees under joint and single audits. This paper, the first theoretical study of joint audits, contributes to a better understanding of the economic consequences of joint audits on audit quality.