Does Independent Director Experience Improve Individual Auditors’ Audit Quality?

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

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Detail(s)

Original languageEnglish
Number of pages22
Journal / PublicationJournal of Accounting, Auditing and Finance
Publication statusOnline published - 2 Jun 2021

Abstract

This study examines whether individual auditors with experience as independent directors provide better audit performance than those without independent directorship experience. Using the Chinese setting where audit partners’ names are publicly disclosed, we find that audit partners with independent director experience provide higher audit quality for clients that operate in the same industries as the companies where they concurrently hold or have previously held directorships. However, directorship experience at companies in different industries has an insignificant effect on audit quality. These findings suggest that independent director service enables audit partners to gain industry-specific knowledge. This leads to knowledge spillovers on the audits of clients in the same industries. This study contributes to the literature by identifying an alternative channel through which auditors gain industry-specific knowledge which enhances their performance.

Research Area(s)

  • audit quality, auditor performance, directorship experience, industry-specific knowledge, knowledge spillovers