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  • 标题:Do (Audit Firm and Key Audit Partner) Rotations Affect Value Relevance? Empirical Evidence from the Italian Context
  • 作者:Alessandro Mechelli ; Riccardo Cimini
  • 期刊名称:International Business Research
  • 印刷版ISSN:1913-9004
  • 电子版ISSN:1913-9012
  • 出版年度:2017
  • 卷号:10
  • 期号:1
  • 页码:143
  • DOI:10.5539/ibr.v10n1p143
  • 出版社:Canadian Center of Science and Education
  • 摘要:

    This research aims to investigate whether and to what extent investors place more weight on accounting amounts disclosed in annual reports issued by entities that experienced a rotation of the audit firm or of the key audit partner. Analysing a sample of 97 non-financial entities listed in the Milan stock exchange over the period 2006-2014, the paper provides evidence that rotations positively affect the value relevance of accounting amounts. In addition, the paper shows how the audit firm rotation and the key partner rotation act only in part as substitutes, as the former is more capable than the latter of positively affecting the value relevance of earnings and book value. These results provide a theoretical contribution to the literature and have significant implications for standard setters. The rotations, even though could determine a loss of client-specific knowledge, nonetheless improve the value relevance of accounting amounts. New rules that require the key partner rotation have a positive effect as long as they do not consider such rotation as an alternative to the rotation of the audit firm being the partner rotation less capable to affect the value relevance of accounting amounts than the key audit firm rotation.

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