Audit partner rotation and negative information hoarding: evidence from China |
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| Authors: | Yujie Zhao Nianhang Xu Donghua Zhou Kam C Chan |
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| Institution: | 1. School of Finance, Jiangxi University of Finance and Economics, Nanchang, Jiangxi, China;2. School of Business, Renmin University of China, Beijing, China;3. School of Accounting, Jiangxi University of Finance and Economics, Nanchang, Jiangxi, China;4. School of Accounting, Zhongnan University of Economics and Law, Wuhan, China |
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| Abstract: | We analyse the impact of mandatory audit partner rotation (MAPR) on negative information hoarding about audit clients using a sample of Chinese firms. Our findings suggest that the outgoing audit partners hoard negative information in pre-MAPR, as revealed by a decrease in crash risk, while the incoming audit partners disclose negative information in post-MAPR. Additional analysis suggests that the results are more pronounced among reviewing partners than engaging partners. We also find that when the outgoing audit partner has strong professional abilities or weak personal network with the client or incoming partner, there is less negative information hoarding around MAPR. |
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| Keywords: | Audit partner personal attributes Audit quality China Mandatory audit partner rotation Negative information hoarding |
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